Small and medium sized businesses are reeling under the impact of an extended lock-down because of Covid-19 pandemic. Australian government is providing economic support to these businesses as part of its overall Economic Stimulus Package. Here are two of the most popular schemes introduced by the government to protect households and businesses from the adverse economic impact of corona virus.
Boosting Cash Flow for Employers
As the name reflects, this is an initiative to provide monetary support to businesses employing workforce. Under this scheme, federal government is extending cash help ranging between $20 k and $100 k in the form of credits to eligible businesses.
The amount of monetary help is equal to the amount of income tax withheld by the business on account of salary of its employees. Under Pay As You Go (PAYG) instalments, you can receive money equal to the amount you have withheld with these exceptions.
- The credit given to businesses is 3 times the amount of tax holdings
- If a business is eligible for assistance under this scheme, it will receive a minimum credit of $1000 for a 3 month period from March to June.
- The total amount of assistance in the form of credits for three months cannot be more than $50 k.
Businesses receiving cash flow under this scheme will get additional boost during the next quarter of 2020. This assistance will be delivered in instalments based upon the time period of reporting.
- This scheme is applicable to small and medium sized business that are active and hold an ABN
- Entity must have a turnover of less than $50 million in the previous year
- It must have made payments under PAYG
SME Scheme for Small Businesses Affected Due To Covid-19
Another scheme launched by the government to help businesses adversely affected by Covid-19 is SME Guarantee Scheme. This program improves the ability of the lenders to provide easy credit to business entities to bail them out of tricky situations caused by Covid-19. This initiative is a part of the economic stimulus package announced by the federal government.
Federal government will provide backing to lenders for loans of up to $250,000 given to SME entities
- Duration of loan is a maximum of 3 years
- Loans will carry a moratorium of 6 months on repayments
- Businesses will not be asked to provide collateral for these loans
- These loans will include term loans and overdraft facility, but credit card facility is not allowed
- Lenders will have the freedom to set their own interest rates
Loans to eligible business entities will be made available through commercial banks. If the existing lender of the SME is not participating in this scheme, it can avail loan from other participating lenders. Loans under this scheme will be disbursed till 30 September 2020.
To be eligible for loans under this scheme, the total turnover of the business in the previous year should be less than $50 million. If the business is new, its expected turnover for the current year should be less than $50 million. Not for profit organizations are also eligible for loans under SME Guarantee Scheme. The only requirement imposed by lenders is that the money should be used for business purposes only. It cannot be used to pay for rent or the expenses incurred on workforce.
For more information regarding the above grants and any other assistance program, please speak to one of our advisors today.