Covid-19 Crisis: Concise Guide to Available Financial Support for SMEs

Covid-19 Crisis: Concise Guide to Available Financial Support for SMEs

Last Updated: 31 March 2020

It would be an understatement to say that small businesses are affected by the Covid-19 pandemic. Day by day, we are seeing many are doing it tough as countries go into lockdowns and businesses are mandated to close, grinding economies to a halt.

With unemployment projected to double this year in Australia and the global economy already contracting, we’ve compiled all the financial help and options available for a small business in Australia to help ease the burden and navigate this unprecedented challenge.

We’ll also update this page frequently with the latest announcements and updates for SMEs.

Federal government's Covid-19 business support 

The RBA has slashed the interest rate to 0.25% and has said it will keep it that low for 2-3 years until unemployment rate stabilises and inflation rate targets are met. This is good news for small businesses as they will benefit from lower loan repayments.

It is also offering a $90 billion term funding facility for banks, essentially pumping liquidity into the economy, so banks can extend that to small businesses and individuals in the form of low interest business loans and loan repayment holidays.

So, what’s the total package so far? 

Total Business Relief Support During Covid-19 Crisis

 First Stimulus Package  $ 17.6 billion
 Second Stimulus Package  $ 66.1 billion
 Term Funding Facility for Banks  $ 90 billion
 Government facility for non-bank lenders  $ 15 billion
 Jobkeeper wage subsidy $130 billion 
Total $318.7 billion


These figures are big, but what do they mean to you, the average small business owner? While many benefits go towards families, pensioners, and workers who have been stood down, laid off, and had their hours reduced, there are still plenty of goodies for SMEs.

Benefits for SMEs with employees

1. JobKeeper wage subsidy

Eligible businesses get $1500 per fortnight per eligible employee for 6 months. This covers 70% of the Australian median wage and is meant to pay your employees if your business is suffering from the coronavirus pandemic and shutdowns. The total financial stimulus amounts to $130 billion over 6 months.

  • Business eligibility: Businesses with less than $1 billion turnover that has seen a 30% loss in turnover year-on-year over a month. Businesses over $1 billion turnover need to see a 50% drop off in revenue. Non-profits and those self-employed without employees are also eligible based on the same rules.
  • Eligible employee: He or she must have been employed for 12 months, as of 1 March 2020, whether full-time, part-time, contract or casual. They must also be a citizen, permanent visa holder, and other eligible types of visa.
  • Timeline: this scheme starts on 30 March 2020 and the first payment is expected on first week of May.
  • How to apply: businesses can register their interest on the ATO website.
  • More details on the Treasury website

2.Up to $100,000 grant money

In this scheme, you can expect to get back 100% of your salary and wages PAYG withholding.  This is great news for businesses that are doing everything they can to keep their staff employed.

  • Who it is for: Small and medium sized businesses and not-for-profit entities including charities with an aggregated turnover of under $50 million.
  • How much: A maximum of $100,000 and a minimum of $20,000
  • How to apply: You don’t have to. This is calculated automatically from your activity statement, whether you lodge monthly or quarterly, and will be credited by the ATO.

3. 50% wage subsidy for apprentice and trainees

Tradies and construction businesses can get a 50% salary subsidy for your apprentice and trainees. This means you can get reimbursed for a maximum amount of $21,000 for each eligible apprentice and trainee you retain, or $7,000 per quarter, as this scheme runs from 1st January 2020 to 30th September 2020.

 

Benefits for SMEs and business owners facing financial distress

1. Business loan deferment for up to 6 months

As part of the term funding facility from RBA, banks are now offering SMEs the option of deferring business loan repayments for up to 6 months, if their business has been affected negatively by the Covid-19 pandemonium.

This small business assistance package will apply to over $100 billion existing small business loans. If your business is struggling to keep up with repayments or are seeing a revenue decline, you should be on the phone to your banker already.

However, bear in mind that deferment means you still have to pay back the 6-month loan holiday you get, with interest, after this is over.

2. Relief for SMEs facing insolvencies and bankruptcies

The government will change the regulations temporarily for 6 months to help businesses that are financially strained by giving them more leeway when faced with statutory demands from creditors, and individual bankruptcy proceedings.

  • Creditors can still issue statutory demand to a company but now the minimum threshold amount will be $20,000 instead of $2,000.
  • Businesses have 6 months to reply to a statutory demand instead of 21 days.  
  • For individuals, creditors can only initiate bankruptcy proceedings against you for a minimum amount of $20,000 instead of $5,000.
  • You can now respond to a bankruptcy notice within 6 months instead of 21 days.

3. $550 extra in Jobseeker payments for self-employed and sole traders

Those who are self-employed and sole traders, who have had their business suspended or experiencing reduced turnover as a result of shutdowns from the Covid-19, and earning less than $1075 per fortnight, can now apply for Centrelink payments under the Jobseeker scheme.

Based on your circumstances, you may qualify for the Jobseeker payments and another $550 per fortnight on top of that, under the scheme called the coronavirus supplement, paid up to 6 months.

4. 6-month ban on tenant eviction

The government has announced a 6-month moratorium or ban on eviction for tenants of residential and commercial properties if they face financial hardship due to the shutdowns. The details have not been released on this yet and will be worked out by state governments.

 

Benefits for all SMEs or business owners

1.Up to $150,000 in instant asset write-off

This is an old scheme but has been boosted to $150,000 from $35,000. It now covers businesses with an aggregated turnover under $500 million, which has been increased from $50 million. You can claim this as a tax deduction when you spend for your business on items such as equipment, machineries, etc. before 30 June 2020.

2. 50% guarantees on short-term unsecured business loans

Called the “Coronavirus SME Guarantee Scheme” worth $40 billion, the government will guarantee 50% of new short-term unsecured loan amounts taken out by SMEs. This package is for SMEs with a turnover under $50 million. The details are still sketchy on this one, so it’s best to consult your bank.

3. 50% depreciation upon installation of eligible assets

This is a 15-month incentive for business investments through accelerated depreciation deductions. If you are a business with an aggregated turnover of less than $50 million, you can now deduct 50% of the cost of an eligible asset upon installation, to help lower your business taxes.

4. $1 billion extra support for Coronavirus-affected regions

For regions most affected by the pandemic, there is an extra $1 billion in support. There isn’t much detail on this released yet. Previously, the government announced $715 million in support to the airline industry.

5. Access your super up to $10,000

Individuals, including sole traders and business owners, can dip their hands into their super for a maximum of $10,000 this financial year, and $10,000 more for next financial year. Although you are essentially using your own money to pull through, it is an option on the table for those who need a fresh cash injection.

 

Where can you get further details?

You can find more details on the all the stimulus announced by the federal government on the Treasury website. The ATO has also set up a FAQ page in dealing with this coronavirus crisis. It has further details on some of the measures announced by the federal government including payment dates and how to access those payments.

 

What other financial assistance is coming from the government?

Rent relief

As more and more people self-isolate and shutdowns are enforced in stages, small businesses are seeing less and less foot traffic, hurting sales. And as more businesses are required to close, many are worried about making rent. Currently, the federal and state governments are knuckling out details for some form of a rent relief package that will help landlords and tenants. At the time of writing, it is unclear whether the financial assistance extends to commercial properties.

State government financial relief for businesses

Each state government has announced different stimulus packages, and more will be coming. The immediate beneficiaries are hospitals, health care workers, the unemployed, small businesses and those most likely to be affected. We have listed the main benefits for SMEs below along with links to the state government's website for more details.

NSW

  • Waiver of payroll tax for businesses with payrolls less than $10 million for the rest of financial year 2019/2020 (3 months)
  • Bringing the next payroll tax cuts forward by increasing the threshold to $1 million in 2020/2021
  • Waiver of fees and charges for certain small businesses including bars, cafes, restaurants and tradies worth up to $80 million
  • Employing more cleaners and cleaning businesses for public infrastructure such as schools and transport vehicles.
  • Spending $750 million to bring forward maintenance project on the state’s public assets, as well as capital works and maintenance

Resource: https://www.nsw.gov.au/news-and-events/news/health-boost-and-economic-stimulus/ 

VIC

  • $500 million Business Support Fund to assist small businesses most impacted by the covid-19 crisis.
  • Refund of payroll tax for the remaining 2019/2020 financial year (3 months) for businesses with payrolls less than $3 million.
  • Deferral of payroll tax payment for the first 3 months of the 2020/2021 financial year.
  • Deferral of 2020 land tax payments for eligible businesses with at least one non-residential property and total taxable landholdings below $1 million
  • Commercial tenants in government buildings can apply for rent relief
  • Waiver of renewable liquor licence fees for 2020 while businesses that have paid will be reimbursed.
  • All the state government’s outstanding supplier invoices will be paid within 5 days, releasing $750 million in the economy.

Resource: https://www.business.vic.gov.au/disputes-disasters-and-succession-planning/illness-and-business-management-plan/coronavirus-business-support 

QLD      

  • Refund of payroll tax for 2 months, a 3-month payroll tax holiday and a deferral of payroll tax for businesses with payrolls less than $6.5 million.
  • $500 million worker retraining fund for those who lost their jobs and income source.
  • $500 million loan facility for small businesses to retain employees and maintain operations. It will be a low interest business loan up to $250,000 with the first 12 months free of interest.
  • $500 million Industry Support Package for large businesses to scale up when economic activity improves
  • $500 rebate for all businesses that consume less than 100,000 kilowatt hours in their power bill.
  • Waiver of fees and charges for tourism businesses

Resource: https://www.business.qld.gov.au/starting-business/advice-support/support/novel-coronavirus

WA       

  • $114 million to support Western Australian small and medium businesses
  • $17,500 grant for businesses with payrolls between $1 million and $4 million.
  • Bringing forward payroll tax threshold of $1 million by 6 months to July 1, 2020.
  • Deferral of payroll tax for 2019/2020 until July 21,2020

Resource: https://www.wa.gov.au/organisation/department-of-the-premier-and-cabinet/coronavirus-covid-19-western-australian-government-response

ACT

  • 6-month waiver of payroll tax from March to August 2020 for hospitality businesses such as cafes, restaurants, hotels, pubs, and creative arts and entertainment businesses.
  • $750 electricity bill rebate for small businesses consuming less than 100 megawatts annually. This is automatically applied in their bill around June or July 2020.
  • Waiver of food and business registration and on-license liquor licensing fees for 12 months for licensed venues.
  • Waiver for outdoor dining fees for 2020-2021 for licensed venues
  • Waiver of rideshare vehicle license fee for 12 months for rideshare operators from 1st April 2020

Resource: https://apps.treasury.act.gov.au/budget/covid-19-economic-survival-package

SA

  • $300 million Business and Jobs Support Fund to assist businesses affected from the shutdowns and the loss of jobs.
  • 6-month waiver of payroll tax for businesses with payrolls up to $4 million
  • 6-month deferral of payroll tax for businesses with payrolls above $4 million that are affected from the shutdowns and coronavirus.
  • Waiver of liquor license fees for hotels, restaurants, cafes and clubs mandated to close due to the shutdown, for 2020/2021.
  • Land tax relief for eligible businesses

Resource: https://www.premier.sa.gov.au/

TAS

  • $20 million in loans to businesses with a turnover less than $5 million in hospitality, tourism, seafood production and exports. This loan is to purchase equipment or restructure the business and will be interest free for 3 years.
  • Waiver of payroll tax for the last 4 months of 2019/2020 for businesses in the hospitality, tourism and seafood production industries. Other businesses with up to $5 million turnover that are impacted by the crisis can apply for the same waiver of payroll tax.
  • $50 million to bring forward public maintenance works over 12 months to help trades businesses.
  • Small Business Grants program will give a $5,000 grant for businesses that hire an apprentice or trainee in the hospitality, tourism, building, construction and manufacturing industries.
  • Rebate for payroll tax for one year, for businesses that hire a young person, 24 years and under, between April and December 2020.

Resource: https://www.stategrowth.tas.gov.au/

Who else can help your business?

This pandemic is possibly a once-in-a-lifetime episode that no one has any experience with. Business owners shouldn’t go it alone or try to do everything themselves.

When projecting figures, planning your finances for the worst-case scenario and dealing with ever-changing rules and regulations, you should seek help from:


SavvySME Official

Official Account at SavvySME

SavvySME is Australia’s B2B community marketplace designed for small and medium businesses. SavvySME helps entrepreneurs and small business owners do their jobs better, faster and with more satisfaction by drawing on a support network of trusted advisors and influencers while learning best practices from industry experts and each other. It combines the collaborative aspects of business networking with a marketplace in an online community setting exclusively for Australian business owners.


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