CORONAVIRUS STIMULUS PACKAGE ANNOUNCEMENT FOR SME'S. MARCH 22, 2020.
Today’s $66.1 billion economic support package had the best announcement for small and medium sized businesses. Sole traders also received early access to superannuation and NewStart benefits.
“We know Australia’s more than 3 million small and medium businesses are the engine room of our economy. When they hurt, we all hurt.” Prime Minister, Scott Morrison.
This is very much the sentiment of most business owners at the moment. Business is hurting, so this recent release of the government package is very much welcomed by the SME’s of Australia.
“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their business. We want to ensure that when this crisis has passed Australian businesses can bounce back,” Prime Minister, Scott Morrison.
“The next few months are going to be a difficult journey but we all have a role to play to adapt to the changes we’re facing, to cushion the impact of what is happening and to pull together so we can bounce back when we get to the other side.” Prime Minister, Scott Morrison.
To boost cashflow and to keep workers employed. All employing businesses will receive at least $20,000. Some larger SME will receive up to $100,000. This is the single largest section of this stimulus package.
“The Government is providing up to $100,000 to eligible small and medium sized businesses, and not?for-profits (including charities) that employ people, with a minimum payment of $20,000. These payments will help businesses’ and not-for-profits’ cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff.”
Small and medium business entities with aggregated annual turnover under $50 million and that employ workers are eligible.
Under the enhanced scheme from the first package, employers will receive a payment equal to 100 per cent of their salary and wages withheld (up from 50 per cent), with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000. The payment will be available from 28 April 2020.
Payments will be automatically paid through the tax system over the next 6 months. The payments are tax free, there will be no new forms and payments will flow automatically through the ATO.
This measure will benefit around 690,000 businesses employing around 7.8 million people, and around 30,000 NFPs (including charities).
An additional payment is also being made from 28 July 2020. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments received.
This measure is estimated to cost $31.9 billion over the forward estimates period, including the value of the measure announced in the first package.
The Government has made an announcement to cut red-tape to allow SMEs to get access to credit faster. Under the Coronavirus SME Guarantee scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders to SMEs.
“Lines of $250,000 for up to 3 years for a business with less than $50 million turnover. No repayments will be required for the first 6 months. These will be unsecured loans” Treasurer, Josh Frydenberg MP
“Small businesses are urged to go and talk to their bank” Treasurer, Josh Frydenberg MP
The Government’s support will enhance lenders’ willingness and ability to provide credit to SMEs with the Scheme able to support $40 billion of lending to SMEs.
The Government will guarantee up to $20 billion to support $40 billion in SME loans.
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands they receive.
Insolvency and bankruptcy laws are to be increased from $2,000 to $20,000 before a creditor can take action. Also allowing 6 months instead of 21 days to respond. There will be relief for directors whilst a company runs insolvent.
“We are facing a global challenge like we have never faced before” Treasurer, Josh Frydenberg MP
“The Government is taking unprecedented action to strengthen the safety net available to Australians that are stood down or lose their jobs and increasing support for small businesses that do it tough over the next six months.” Scott Morrison
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