The government is providing critical financial support for eligible businesses and their employees through the JobKeeper stimulus package.
For many small businesses, the past month has been the hardest they have
ever faced. Revenue has dried up for some while others are surviving on a
trickle. We hope those affected will find it reassuring to know that billions
of dollars in government aid is in the pipeline.
Grants, subsidies, tax breaks and
loan guarantees are among the relief coming. You may have read about some of
these at our Business Continuity Hub.
But the last type of help – loan guarantees – deserves further attention.
Under the Coronavirus SME Guarantee Scheme, the government
has just named two dozen lenders that may extend federal-backed loans of up to
$250,000. The government will guarantee 50 percent of new loans, which could
make it easier for small businesses to qualify. The list of lenders should grow
in the coming weeks.
In addition, major banks have committed to providing businesses that are
eligible for JobKeeper payments with a
faster way to access temporary financial assistance options.
A helping hand for JobKeeper eligible
The government is providing critical financial support for eligible
businesses and their employees through the JobKeeper stimulus package. With
payments due to begin in May, one chief eligibility criteria is that businesses
must have paid workers at least the minimum $1,500 fortnightly wage subsidy
payments throughout April (the Commissioner has extended the time to enrol for
the initial JobKeeper periods from 30 April 2020 until 31 May 2020).
Many small businesses are needing help with the cash gap as they pay
staff JobKeeper payments before 8 May (at the latest) and pay their January to
March quarterly superannuation guarantee payments before 28 April.
To ease the pressure on employers, ANZ, CBA, NAB and Westpac have
expanded their support measures for businesses impacted by COVID-19. The
creation of dedicated hotlines will enable customers to apply for loan funds
ahead of JobKeeper payments becoming available (you can find the hotline
numbers below). These special measures will help businesses continue to pay
their staff during these challenging times.
ANZ: 1800 571
CBA: 13 26 07
JOBKEEPER (1800 562 533)
1300 731 073 / St George 1300 730 196 / Bank of Melbourne 1300 784 873 / Bank
SA 1300 669 472
Time is of the essence
Some of the lenders under the Coronavirus SME Guarantee Scheme are
remarkable for their quick decisions and simple approach. While traditionally
lenders have required stacks of paperwork and several weeks to process a loan
application, some on the government’s list require no paperwork. The fastest
among them can return a lending decision within a few hours and disburse money
within one business day, thanks to integrations with accounting software.
But what if your recent financials aren’t stellar? You’re not alone. And
thanks to the government’s loan guarantee, lenders should be offering even more
support than usual to small businesses. Loans that are backed by the government
also come with a repayment holiday, which means repayments are suspended for
Explore your options
It’s worth bearing in mind that these are still loans. They do have to
be repaid, in this case in up to three years. Borrowing money shouldn’t be your
first resort when cash flow is strained, and you should talk to an accountant
before deciding which options are best for you. But in these difficult times,
they can be a welcome lifeline for some small businesses.
Because the government has just begun naming participants in its
guarantee scheme, these lenders are preparing customised products that comply
with the federal requirements and eligibility. Once their government-backed
lending products are in place, we can expect updates on how to apply.
In the meantime, Moula, Prospa and NAB QuickBiz are three lenders that
already integrate seamlessly with Xero. They also offer quick decisions on loan
products outside of the government scheme. As with the government-backed loans,
all of their loans are unsecured, which means you needn’t put up your home as
collateral. Again, it’s worth discussing which loan type, if any, would best
suit your situation.
These are uncertain times, and at Xero we’ll do our best to keep you
updated about resources that may be of help. In particular we’ll be focusing on
new areas that support the different lending options available and what you can
do to be better ready for that process. You can read more about our current
lending integrations here, and we invite you to
join the conversation with other small businesses in our Business Continuity Hub.