Covid-19 update – JobKeeper applications open, 30-day payment times & more credit options for SMEs
JobKeeper applications are now open for the government’s $130 billion JobKeeper Payment scheme. The scheme supports businesses significantly affected by the coronavirus to help keep more Australians in jobs.
The JobKeeper payment is open to eligible employers, sole traders and other entities to enable them to pay their eligible employee’s salary or wages of at least $1,500 (before tax) per fortnight.
You can enrol for the JobKeeper payment through the ATO’s Business Portal, in ATO online services using myGov if you are a sole trader, or through a registered tax or BAS agent.
Eligible employers will be reimbursed a fixed amount of $1,500 per fortnight for each eligible employee.
Employers need to pay all eligible employees a minimum of $1,500 (before tax) per fortnight to claim the JobKeeper payment. This will be paid to the employer in arrears each month by the government. The first payments to eligible employers will start in the first week of May 2020. JobKeeper payments can be made for the period beginning 30 March 2020.
If employers do not continue to pay their employees for each pay period, they will cease to qualify for the JobKeeper payment.
To be eligible for the JobKeeper payment, employers and their employees must meet a range of criteria.
30-day payment times
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has called for federal legislation requiring small businesses to be paid in 30 days, amid a fresh wave of big businesses using the COVID-19 crisis as an excuse for poor payment times.
“Large businesses extending or in some cases, suspending payments to small businesses are on notice that this behaviour is unacceptable,” she says.
“There’s no denying businesses of all shapes and sizes are enduring extraordinary challenges as a result of the Coronavirus crisis, but small businesses are being hit hardest.
“Many small businesses have been forced to close their doors and a lot may not survive the coming months, even with significant support from the government. That’s why it is more important than ever to ensure small businesses are paid on time.
“We know that if small businesses are paid on time, the whole economy benefits. On the flip side, a lack of cash flow is the leading cause of insolvency.
“Legislation requiring SMEs to be paid in 30 days is the only way to drive meaningful cultural change in business payment performance across the economy.
Big businesses such as MYER, David Jones, Just Group, Sussan Group, Carlton United Brewery and CIMIC have payment policies that are damaging to their small business suppliers.
“When used appropriately, supply chain finance is a legitimate and effective product that can be used to free-up cash flow for small and family businesses. In fact, it may be particularly useful to small businesses that need to be paid faster as they navigate their way through the COVID-19 crisis.
“However it is critical that harm inflicted on small businesses as a result of misuse of these products be urgently addressed,” she adds.
Access to credit critical to small business survival
Carnell has welcomed the federal government’s decision to provide some non-bank lenders with access to the COVID-19 SME Guarantee Scheme.
The scheme provides eligible small businesses with access to up to $250,000 in unsecured funding, including a six-month repayment holiday with interest accrued to be amortised over the course of the loan.
“The inclusion of five non-bank lenders in the scheme means there is a greater chance of credit flowing to viable small businesses that need it,” she says.
“Non-bank lenders are accustomed to lending unsecured and getting funding to SMEs quickly.
“It is important the selected fintechs pass on the lower rates for loans under this scheme to small businesses, as they are backed by a 50 per cent government guarantee.
“Essentially this means the government is taking on half of the risk of the loan and that needs to be reflected in loan pricing. This is something my office will be monitoring closely.”
