The global pandemic continues to have a heart-breaking effect on many small and family businesses. With the lockdown in Sydney extended until at least the end of September, and lockdown in regional NSW, Victoria and the ACT extending well beyond what was originally hoped for, it’s a tough time for many owners and leaders of small and family enterprises.
Thankfully, support continues to be rolled out and refined as COVID constraints hamper economic activity.
SME support continues for COVID-impacted businesses
The Australian Government’s expansion of eligibility for the SME Recovery Loan Scheme is welcome and recognises not just the sharper impact of lockdown, but also the corrosive impact of extended trading restrictions that can eat away at financial and emotional resources.
The requirement for SMEs to have received JobKeeper during the March quarter of 2021 or to have been a flood-affected business in order to be eligible has been removed. This signals that funds to support business recovery and investment as the economy opens up will not only be needed by those that have felt the sharpest impacts, but also many that have ‘hung on’ with substantially reduced activity.
SMEs who are dealing with the economic impacts of COVID-19 with a turnover of less than $250 million can access loans of up to $5 million over a term of up to 10 years. The Government will guarantee 80% of the loan amount and loans can be used for a broad range of business purposes including refinancing pre-existing debts, with lenders allowed to offer borrowers a two year repayment holiday.
Hardship considerations for small businesses add to support measures
Financial institutions are to be congratulated for the constructive role they are playing in providing relief and supporting the recovery of COVID-impacted small business customers. They are helping those most affected and carefully considering whether further deferrals are needed or whether the plight of the business warrants hardship considerations.
Accumulating debt and the amount of deferred liabilities are clearly key considerations as businesses map a path forward in a changed marketplace. Past foot-traffic, customer mobility and the way people socialise will not immediately return to pre-COVID conditions and recovery-impaired businesses are going to need our help for some time yet.
That’s why the reactivation of commercial tenancy relief by the Victorian and NSW governments is important. It’s something my office has been advocating for as a component of known public and private sector support small business can count on when enduring extended lockdown.
Rent relief for businesses in distress
Businesses that have experienced a loss in turnover of more than 30% during the pandemic are now guaranteed to receive rent relief in the form of waivers and deferrals. Both governments also have an eye to the impact on small and family business landlords with land tax relief available for landlords doing the right thing by tenants and support available to those experiencing acute hardship.
As welcome as these measures are, policymakers will need to be alert to the challenges of landlords and tenants navigating market adjustments, particularly in CBD locations where substantial reductions in foot traffic will have a devastating impact on once-thriving retail and hospitality sites and see a resetting of sustainable rental expectations.
I was delighted to hear that Australia Post will continue perishable goods delivery for small and family businesses across the country, particularly in rural and regional areas. This announcement will bring sighs of relief and renewed enthusiasm for producers who can continue to build their businesses with a reliable fulfilment partner and delight even more customers into the future.
Government amends regulatory framework
I also welcome the Government’s commitment to lowering costs for businesses through least cost routing. Treasurer Josh Frydenberg has released the Payments System Review which assessed the adequacy of the current regulatory framework. The review recognised that there are regulatory gaps and reform is needed to ensure the system reflects rapid technological change. The Treasurer’s urging of the RBA’s Payment Systems Board to consider mandating the dual-network debits cards to facilitate least-cost routing is a game-changer.
My office continues to advocate for strengthened unfair contract term protections for small businesses. We welcome the release of a draft Bill to the exposure draft Bill proposing reforms to help reduce the prevalence of unfair terms in standard form contracts and improve small business confidence when entering into standard form contracts.
In line with requirements under the Australian Small Business and Family Enterprise Act 2015, the 2021 review of our office has been completed and is available on the Treasury website.
The report is overwhelmingly positive with great support for our office and the work we do across the small business sector.
The recommendations point to the need to continue engaging across the sector, ensuring we continue to promote our dispute resolution services and have the resources we need to provide this service. We’ll be looking to address these recommendations in line with our strategic plan over the next year.
Despite pandemic new business ventures on the rise
Buoyant new business registration and enterprise entry data points to a kind of renaissance in entrepreneurship and self-employment, perhaps inspired by a rethink of life goals. A rebalancing of work-to-live and live-to-work livelihood ambitions, or purely as a result of necessity, there are signs of optimism as more people join the small business and family enterprise community. It is pleasing that so many sole traders and non-employing businesses are adding staff to their teams.
Owning and leading a small or family business can be a source of great joy and satisfaction, despite the big responsibility and challenge. Right now this is an incredibly hard time for many small and family businesses. If you are feeling overwhelmed or struggling to cope, concentrate or sleep, I encourage you to reach out by visiting our My Business Health web portal or registering for Beyond Blue’s New Access for Small Business Owners program.
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