SME Recovery Loan Scheme revamped to help more businesses

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More small and medium-sized businesses struggling to stay afloat due to the economic impacts of COVID will have access to cheaper funding after the federal government expanded the eligibility criteria for the SME Recovery Loan Scheme.

The government is removing requirements 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 for the SME Recovery Loan Scheme.

What’s special about the SME Recovery Loan Scheme?

Ok, basically the federal government will guarantee 80% of each loan in the scheme, and because of this, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans.

The first iteration of the scheme kicked off back in March 2020 under a slightly different name – the SME Guarantee Scheme (and back then the government was only guaranteeing 50% of the loan).

Under today’s version of the scheme, SMEs dealing with the economic impacts of COVID with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other key features of the SME Recovery Loan Scheme include:

– Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
– Loans can be used for a broad range of business purposes, including to support investment.
– Loans may be used to refinance the pre-existing debt of an eligible borrower, including debts from the SME Guarantee Scheme.
– Loans can be either unsecured or secured (excluding residential property).

Could this scheme help your business?

So far, 74,000 loans totalling around $6.2 billion have been written under the scheme – so it’s already helped a lot of other businesses around the country.

NAB and Westpac, both participating lenders in the scheme, immediately welcomed the changes, with NAB stating “SME Recovery Loans are a good option for businesses who need additional capital at this time”.

It’s important to note, however, that the loans will only be available through participating lenders until 31 December 2021.

So if you’re interested in finding out whether the SME Recovery Loan Scheme could help your business, get in touch today and we can help you apply through one of the participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

COVID hardship and grant options that could help you

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With the pandemic once again tightening its grip around many parts of Australia, today we’ll run you through hardship and grant options that could be available to you or your business.

Setting all politics aside, it’s safe to say no one wants to be here. Yet here we are – this time with no JobKeeper or the original JobSeeker payment to help keep us afloat.

So what grants, schemes and hardship arrangements are available to small businesses and individuals this time around?

Let’s run through this year’s COVID support options below.

Loan deferrals on home and business loans

Impacted small businesses with loans in good standing are being supported by lenders with repayment deferrals of up to three months.

For home loan holders, lenders are also providing a range of support measures, including loan deferrals on a month-by-month basis.

Since July 8, more than 14,500 home loans have been deferred, while more than 600 business loans have been deferred.

“Support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, irrespective of geography or industry,” says Anna Bligh, CEO of the Australian Banking Association.

Business grants and payments

As you’ll see below, each state and territory has their own grants and schemes available for businesses and individuals.

As the situation is constantly evolving, it’s worth double-checking to see if your business is eligible for any other grants or payments not listed below.

NSW: If you’re a business, sole trader or not-for-profit organisation in NSW and you’ve been impacted by the recent COVID-19 restrictions, you may be eligible for a one-off grant of $7,500, $10,500 or $15,000. Apply here by September 13.

Victoria: There are several grants in Victoria for employing and non-employing businesses. The Small Business COVID Hardship Fund provides $10,000 grants for eligible SMEs that have experienced a reduction in turnover of at least 70%. Apply here by September 10. The Business Costs Assistance Program Round Two offers grants of $4800 to eligible businesses in specific industries. Apply here by August 20.

Queensland: Lockdown-impacted businesses in Queensland can apply to receive a grant ranging from $10,000 to $30,000, depending on the size of their annual payroll. Grants of $1,000 are also available for non-employing sole traders. Apply here by November 16.

Western Australia: The Small Business Lockdown Assistance Grant: Round Two provides $3000 cash flow support to small businesses in industry sectors most impacted by the recent circuit-breaker four-day lockdown and interim restrictions. Apply here by August 31.

South Australia: Small and medium-sized businesses forced to close as a result of the state’s lockdown (beginning 20 July 2021) may be eligible for a $3,000 emergency cash grant. Sole traders may be eligible for $1000. Apply here by October 17.

ACT: COVID-19 Business Support Grants will provide up to $10,000 for employing businesses and up to $4,000 for non-employing businesses that experienced a turnover decline of 30% or more as a result of the COVID-19 lockdown health restrictions. Find out more here.

For individuals

The federal government’s COVID-19 Disaster Payment is a lump sum payment to help workers unable to earn income due to a COVID-19 state public health order.

This may involve a lockdown, hotspot or movement restrictions. How much you can get depends on your location and circumstances. It’s available to eligible ACT, NSW, QLD, SA and Victoria residents.

Tenant and landlord support

NSW landlords who reduce rents for tenants hard-hit by the pandemic will be able to access up to $3,000 per tenancy agreement.

For landlords to be eligible, their tenant’s take-home weekly income must have fallen by 25% or more. The tenant also needs to continue to pay at least 25% of the rent payable.

Meanwhile, the Victorian Government has made it a requirement for commercial landlords to provide rent relief that matches their tenants’ fall in turnover in response to coronavirus, where the tenant is eligible for commercial tenancy relief support.

Get in touch today

Last but not least, it’s worth noting that there are refinance or restructure options you can explore in order to reduce your business or home loan repayments each month (without hitting the pause button). These include:

– asking for a better rate or moving to a lender that can provide one;
– extending the length of your loan;
– switching to interest-only payments for a period of time; and
– consolidating debt.

So if your business or household is one of the many doing it tough again, please get in touch today – we’re ready to assist you through 2021 and beyond, in any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

New super laws: a timely reminder to check your life insurance policy

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What measures do you have in place to help protect your family home or business? If life insurance through your superannuation account is one of them, then it’s a good time to give it a quick review – especially if you work in a high-risk environment.

We’ve all switched off mentally during those sombre daytime life insurance ads on TV.

But stay with us, because there’s a good reason we’re writing this article today: new superannuation laws have passed parliament and will come into effect on November 1.

And if you have a super account, there’s a better than even chance you have a life insurance policy attached to it that could be impacted – especially if you work in a hazardous or high-risk industry such as construction, truck driving and mining.

What are the new laws?

So, the federal government recently passed the Your Future Your Super legislation.

The measure, which will tie workers to a single super fund from November 1, has been praised for its potential to put an end to people having numerous super accounts that are eaten away by multiple sets of fees.

But concerns have also been raised that workers in hazardous industries, such as construction, truck driving and mining, will be left without suitable life insurance and/or total and permanent disability insurance due to policy exclusions for high-risk occupations.

Now, some super funds that were created for specific industries automatically sign their members up for insurance tailored to their specific professions.

But others don’t.

“Quite often, members only discover they have been paying for a product that is effectively useless when they become disabled and make a claim,” Maurice Blackburn principal Hayriye Uluca explained to Sydney Morning Herald (SMH).

This means if you originally signed up to a fund that is tied to an insurer that uses occupation exclusions, you might end up paying for insurance that’s essentially worthless if you start work in a high-risk industry.

What to do?

The Federal Treasury says it’ll be conducting a review into it all.

But you can quickly and easily conduct your own review to see if you’re properly covered by suitable insurance.

Here’s a straightforward MoneySmart guide on consolidating your super through MyGov. And here’s another guide on things to be mindful of when choosing a super fund.

“The best thing to do is talk to your fund, ask them specifically. Tell them the type of work you do, your occupation and what it involves, and ask them if their policy covers it,” SuperConsumers director Xavier O’Halloran told SMH.

And while you’re at it, don’t forget to review the amount you’re insured for to determine whether your cover is enough to help you – or your loved ones – make loan repayments and protect important assets like your business or family home if need be.

If you’re not sure if your insurance cover is sufficient, call us today and we can put you in touch with a financial planner who can review your situation and provide feedback on your coverage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Cash flow tips for businesses thriving and surviving the pandemic

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Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.

Covid-19 has really brought a two-speed economy to the fore in Australia.

For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.

Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.

Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.

So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.

Three tips for managing growth

1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.

“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.

“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”

2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.

If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.

“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.

3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.

Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.

“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.

“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”

Three tips for getting through tough conditions

1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.

Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.

“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.

He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.

“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”

2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.

“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”

3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.

He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.

Last but not least, get in touch

If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.

The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Need help paying your insurance and workers comp premiums this year?

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As if Australian business owners hadn’t faced enough challenges this past year – now the dreaded annual insurance and workers compensation premiums will soon arrive in mailboxes. Here’s how to smooth ‘em all out (and get an early bird discount!).

If you’re a business owner, you know there’s no shortage of big bills you’ve got to keep one step ahead of at this time of year.

And your annual insurance premiums are no exception, whether that be for professional indemnity insurance, product liability insurance, public liability insurance, or any other general business insurance policy.

Throw your workers compensation premiums into the mix and you’ve got quite the annual financial hurdle to overcome.

Fortunately, a financing option exists that can ease your cash flow headache and help you become eligible for an early bird discount on your workers comp premium.

Have you heard of Insurance Premium Funding?

Insurance Premium Funding (IPF) enables you to split your insurance payments into manageable, affordable, monthly amounts that won’t cripple your business’s cash flow like an annual lump sum payment can.

Basically, any business that has an insurance premium of more than $5,000 has the ability to use IPF if they need to.

The insurance premiums are normally financed over 8 to 10 months to ensure the premium is fully paid before its renewal, and there is generally no security required with IPF.

Workers comp early bird payment discount due soon

One insurance premium that IPF is commonly used for is workers compensation.

That’s because in some states (including NSW, Victoria and Queensland), employers who pay their annual premium in full are entitled to a 3% to 5% early bird discount.

But to qualify for the early bird discount, workers comp premiums need to be paid in full before the early bird due date arrives (typically around August/September).

So, by using IPF to make this payment upfront you can secure the early bird discount, which helps to offset the cost of IPF.

By taking this path, you can smooth out your business’s cash flow and redirect capital into income-generating investments.

Find out more

If you’d like to find out more about financing options for IPF then get in touch today – especially if you want to be eligible for the workers comp early bird discount.

There’s no shortage of financial hurdles for businesses to overcome during these difficult times, so we’d love to help you out any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.