In the face of the threat to finances posed by COVID-19, will you be able to keep your business afloat for the next few months? The good news is that there now many avenues of assistance available, and new business strategies you can adopt. Here is a checklist for business on what to explore.
When it comes to keeping your business operating through the COVID-19 crisis, different forms of special relief have been announced for small business, not only by federal and state governments but also by banks and The Australian Tax Office (ATO). However, in more personal terms, have you also considered changing your business strategy to increase online sales or even raising funds from legally crowdfunding your enterprise? There are many possibilities.
In positive news, state and federal governments have announced special measures to help keep businesses operating and staff employed during the crisis. The main measure announced in March by the federal government was the Boosting Cash Flow for Employers
measure which will grant up to $100,000 to eligible not-for-profits and small and medium-sized businesses, with a minimum payment of $20,000. This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
Charities and small and medium-sized business entities that employ workers and have an aggregated annual turnover under $50 million are eligible.
Here is a summary of ways to boost cash flow in your business.
• Federal government grants
Help for SMEs includes cash grants for employer salaries of up to $50,000 and their businesses of up to $100,000, tax breaks such as payment deferrals and reductions, and apprentice wage subsidies. For more information visit Support for Businesses.
• Facebook Small Business Grants Program
Facebook is offering $US100 million in cash grants and advertising credits to small businesses that are experiencing disruptions due to the COVID-19 outbreak. This offer applies to 30,000 eligible small businesses in over 30 countries and Facebook will be taking applications soon. Register here for the Facebook Small Business Grants Program.
• Pause on loan repayments
The Australian Banking Association (ABA) says all small businesses hit by the coronavirus pandemic can access a six-month deferral of all loan repayments. The relief package will apply to more than $100 billion in small business loans and the ABA expects it could put $8 billion back into the pockets of these companies. Banks are putting in place a fast track approval process to ensure customers receive support as soon as possible. Find out more about the Small Business Relief Package.
• Unsecured business loans
Commonwealth Bank (CBA) will make available up to $10 billion of additional unsecured credit to support SMEs with less than $50 million turnover. This means SMEs can access an unsecured business loan through CBA for three years of up to $250,000 at historically low rates. Interest rates on unsecured small business loans will be up to 500 basis points lower than current rates. No interest will apply unless the loan is used, no repayments will be required for six months, and there will be no establishment or monthly account fees. The credit offer is part of the Australian Government’s Coronavirus SME Guarantee Scheme. Find out more about the CBA Unsecured Business Loans.
• Tax breaks by state governments
The NSW state government has waived payroll tax payments for businesses that pay wages of up to $10 million. These businesses will not have to pay the tax for the rest of this financial year. The stimulus package also includes $80 million for fees and charges to be waived for small businesses such as cafes, restaurants and those in trades. And the payroll tax tax-free threshold will increase from $900,000 to $1 million for the financial year commencing on 1 July 2020. Check the requirements here for NSW payroll tax relief.
• Increase online sales
While many businesses are suffering a negative impact from COVID-19, online sales are one area that is growing as more people work from home and socially isolate.
Demand for online shopping, home delivered food, streaming services and internet usage have all increased.
To remain viable, many small businesses will need to increase their online presence and it is wise to investigate which are the best platforms to use to reach your customers. Nielsen offer valuable insights on how this crisis is changing consumer behavior and how business must respond.
• Crowdfund your business
Crowdfunding for business is now legal in Australia and is a way to finance your business through loans, donations or exchanging money for rewards or shares. You generally do this through a crowdfunding website. Once you post your business idea, people can support your business by contributing money to help you achieve your goal.
Depending on your business idea, and the type of crowdfunding you choose, you may need to register for licenses or meet legal terms and conditions. Check information provided by the Australian Tax Office on How to Crowdfund Your Business.
For a more targeted look at how boards should respond to the COVID-19 challenge, access a recording of our Australian Institute of Company Directors webinar on COVID-19: Advice from Turnaround Experts webinar.