The most common question we have been asked this week is ‘what options are available to help my business, staff and myself get through Covid-19’. We have been able to offer numerous options to our clients and have worked through many solutions to combat current and predicted future cash flow issues.
As you may be aware, the Government has released several stimulus package alternatives to small business. These include:
- Providing up to $100,000 to eligible small and medium sized businesses, that employ people, with a minimum payment of $20,000. These payments will help businesses’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff
- Supporting small business to retain their apprentices and trainees. Eligible employers can apply for a wage subsidy of 50 per cent of the apprentice’s or trainee’s wage paid during the 9 months from 1 January 2020 to 30 September 2020. Where a small business is not able to retain an apprentice, the subsidy will be available to a new employer.
- Government will provide a guarantee of 50 per cent to SME lenders for new unsecured loans (up to $250,000) to be used for working capital. This will enhance these lenders’ willingness and ability to provide credit, which will result in SMEs (small and medium-sized enterprises) being able to access additional funding to help support them through the upcoming months. The loans will be up to three years, with an initial six month repayment holiday. The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Assistance for employees includes:
- The Government is providing two separate $750 payments to social security, veteran and other income support recipients and eligible concession card holders. Around half of those that benefit are pensioners. These payments will support households to manage the economic impact of the Coronavirus.
- The Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight. This supplement will be paid to both existing and new recipients of the eligible payment categories. These changes will apply for the next six months.
In addition to the Governments Stimulus package released last Sunday, the ATO have outlined the following options to assist businesses impacted by COVID-19 include:
- Deferring by up to six months the payment date of amounts due through the business activity statement (including PAYG instalments), income tax assessments, fringe benefits tax assessments and excise
- Allow businesses on a quarterly reporting cycle to opt into monthly GST reporting in order to get quicker access to GST refunds they may be entitled to
- Allowing businesses to vary Pay As You Go (PAYG) instalment amounts to zero for the March 2020 quarter. Businesses that vary their PAYG instalment to zero can also claim a refund for any instalments made for the September 2019 and December 2019 quarters
- Remitting any interest and penalties, incurred on or after 23 January 2020, that have been applied to tax liabilities
- Working with affected businesses to help them pay their existing and ongoing tax liabilities by allowing them to enter into low interest payment plans.
In addition to the above we would also suggest consideration be given to the following:
- Contact any financiers (business loans or car finance) to whom you make regular monthly repayments and request up to a 6 months deferral on your repayments to assist with your cashflow.
- Contact your insurers to assess whether you have insurance that covers pandemics
- Contact your landlord to request rent relief (either deferral or rent reduction) on your commercial premises. As we write we are currently waiting for a Government announcement to assist small businesses pay their rent.
- If you’re a landlord, review your insurance policy to determine if you’re covered for rent default by your tenant
- Contact suppliers you currently pay any fixed monthly costs to and see if any leniency can be obtained with regard to these payments
- Ensure any staff stand downs are undertaken in accordance with Fairwork legislation
- Review terms for your debtors and ensure communication channels stay open to prevent these becoming bad debts
- Monitor your cash flow and prepare weekly budgets and forecasts