Further Support for Small Businesses

The Federal Government has announced a second major economic rescue package worth $66bn, on top of an initial $17.6bn package and more than $100bn in emergency banking measures to help keep businesses open and save jobs.

 

Presented as a "safety" package, the second instalment of the stimulus increases support for small businesses and includes a major boost to welfare recipients for people who lose work as a result of the Covid-19 pandemic.

 

In total, the government has now committed economic support worth $189bn - almost 10% of GDP - and has also flagged additional packages to follow.

Summary

The measures include:

• A wage subsidy for small and medium businesses to save jobs; and
• A guarantee on loans for small and medium businesses so they can stay in business

Small Business Support

The Government will be offering eligible businesses a cash payment of up to $100,000 for the period March 2020 to September 2020.

 

The payment will be worth 100% of the tax those small and medium businesses, with a turnover less than $50 million, are withholding from their employees' salary and wages.
 

How the Payment Works

Eligible businesses that withhold tax to the ATO on their employees' salary and wages - they report it each month or quarter anyway - will receive a payment equal to 100% of the amount withheld, up to a maximum payment of $100,000.

 

Eligible businesses that pay salary and wages will receive a minimum payment of $20,000, even if they are not required to withhold tax. In the Government's first package they announced the cash payment would be 50% of tax withheld worth up to $25,000 in payments or a minimum of $2,000.

SME Guarantee Scheme

There will be a new Coronavirus SME Guarantee Scheme to support small and medium businesses with a turnover less than $50 million.

 

This step complements the $8 billion worth of measures the banks announced this week to defer repayments for 6 months for small and medium businesses battling the impacts of coronavirus. The Coronavirus SME Guarantee Scheme will be able to be accessed by eligible banks and non-bank lenders.
 

The Specifics

Under the Scheme, the Commonwealth will guarantee 50%, through the participating banks, of an eligible loan to small and medium enterprise customers that have been impacted by the coronavirus.

 

The Scheme will have the capacity to support lending of $40 billion to small and medium businesses. Loans will be used for working capital purposes and be unsecured and it will be for loans granted within 6 months starting 1 April 2020.

 

The Scheme will apply to new or existing customers of banks and non-bank lenders.

 

Lenders will not be charged a fee for accessing the Scheme and the repayment is free for 6 months. The maximum loan will be $250,000 for a term up to 3 years.

 

The Australian banking sector also announced on 19 March significant measures - that many individual banks took additional steps to support existing loans. To read more on how your bank can help click here.
 

Supporting Apprentices and Trainees

Last week, we shared with you the details regarding the stimulus package for apprentices and trainees. The Australian Government have developed this guide for you. Download it here.

We are in this together and are naturally concerned about you and everyone in your business. If you need advice or support please contact us on 1300 363 831.