While the majority of Australian businesses are rejoicing with the news of COVID-19 restrictions easing, for many the road back to ‘normal’ is going to be a long one. That’s why it’s important to know about the various forms of government assistance for small businesses.
Yes, there are grants out there, including many state and local government initiatives.
And we’re all well aware of the federal JobKeeper scheme, but the government support doesn’t stop there.
Whether you need financial support, tax relief or financial counselling, there is help available. Let’s take a look at the four broad types of government assistance for small businesses currently on offer.
Editor’s note: Bring more customers to your business with a website — get one for free now.
1. Financial relief
If finances are an issue for you, you are not alone. Here are a few types of government assistance for small businesses you might find useful:
If you’re struggling to meet your tax obligations, then the Australian Tax Office can assist with low-interest payment plans or payment deferrals. ATO makes these arrangements on a case-by-case basis.
For more info, visit business.gov.au.
Temporary government relief for financially-stressed businesses
Traditionally, a creditor can issue a statutory demand on you if you have been unable to pay a debt of as little as $2,000. But to give businesses some more breathing room during these unprecedented times, the minimum threshold has been lifted to $20,000 for six months.
The timeframe for responding to a demand to pay has been increased from 21 days to six months.
This is a temporary change designed to provide relief to business owners struggling to get back on their feet, so be sure to check this page to see if it is still in effect.
Relief for commercial tenants
The government has put a temporary hold on evictions for both commercial and residential renters in financial distress. In terms of commercial tenants, small-to-medium-sized businesses with a turnover up to $50 million are eligible for this rent relief.
A Code of Conduct for Commercial Tenancies has been applied with a common set of 14 principles. The guiding principle is that any agreement must share the pain between the landlord and the tenant.
In addition, any agreement must be spread over sufficient time for the tenant’s business to support the rent repayment.
You can find details on relief for commercial tenants here.
Note: The evolving nature of the pandemic means the state and federal government are introducing and reevaluating new and existing schemes regularly, so keep up to date with the Government website.
The Australian government is keen to help businesses make the purchases they need to keep their ventures afloat.
Instant asset write-off
You’re likely familiar with the Instant Asset Write-off scheme, a government strategy to stimulate business purchases.
What the scheme allows you to do is spend a large sum of money on an asset for your business now.
But instead of depreciating it over time, it can be written off instantly, giving you much-needed tax relief.
- Prior to COVID-19, the scheme was capped at $30,000 per financial year and had not been extended beyond June 30 2020.
- Since COVID-19, the annual cap has been increased to $150,000 and the scheme has been extended to 31 December 2020.
Check here for the latest updates on the Instant Asset Write-off.
Coronavirus SME Guarantee Scheme
Do you have a turnover of less than $50 million? If you do, the government will guarantee 50% of loans that banks and other financial lenders provide to your SME (small or medium enterprise). This reduces risk for lenders, encouraging them to get those loans flowing.
Note that you will only pay interest on the amount you draw down. If you find you don’t need to draw on the funds, you won’t be charged interest.
There are other benefits of the scheme. These loans are unsecured, so you will not be required to provide an asset as security for the loan. The loans will also commence with a six-month repayment holiday.
On 1 October 2020, the terms of this scheme expand to include:
- A maximum loan size of up to $1 million per qualified borrower
- Loan terms may be up to five years rather than three years
- Loans may be either unsecured or secured
All decisions on whether to extend credit, as well as management of the loan, will remain with the lender. Check here to see if the scheme is still operating and whether the terms have changed.
3. Financial counselling
The government has provided funding to offer free and confidential financial counselling to small regional business owners who are struggling with finances.
The goal of this counselling is to help them:
- Get a clear sense of their current financial position
- Find useful options
- Make plans to improve their business prospects
To be eligible, you must have 19 employees or fewer and not be located within 20km of a city or town with a population of 50,000 or more.
This initiative will run until 30 June 2021. For more info, visit agriculture.gov.au.
4. Mental health support
Recent events have understandably made people the world over feel anxious, stressed and worried.
The government offers a range of resources for those having mental distress due to the impact of the COVID-19 pandemic on their business and livelihood.
Whether it’s you or your employees who are suffering, know there are many agencies ready to help:
- Beyond Blue
- Australian Psychological Society
- Black Dog Institute
You can find more resources and links here.
4 types of government assistance for small businesses
This is an unprecedented time for everyone, including small business owners. Don’t tackle it alone. There is support available — whether you need immediate financial help or simply want to put your business on a better footing for future growth and stability.
The information contained in this blog post is provided for informational purposes only, and should not be construed as an endorsement or advice from GoDaddy on any subject matter.