In the wake of social distancing and enforced closures due to the COVID-19 (Coronavirus) pandemic, Australian small businesses are being crushed and many have had to close their doors for good. Revenue, staff availability, suppliers, and business operations are being impacted and it is unknown how long this will last.
Small business owners may be suffering personal financial difficulties with the loss of revenue or their businesses being forcibly closed. Here are some government support packages that can be used for personal income to support yourself through this difficult time.
Resources for Australian Small Business Owners:
The JobKeeper Payment is designed to help small businesses, sole traders, and the self-employed whose business operations have been severely impacted by COVID-19. Under this scheme, the Australian government will provide business owners with a subsidy to continue paying their employees and themselves. This will be a fortnightly payment of A$1,500 per eligible employee from 30 March for a maximum of 6 months.
Business owners with or without employees can register their interest in the JobKeeper Payment via the Australian Taxation Office from March 30, 2020. The first payments will be made in the first week of May.
Businesses without employees, such as the self-employed, should:
- Provide an ABN for their business.
- Nominate an individual to receive the payment.
- Provide the individual's Tax File Number.
- Provide a declaration as to recent business activity.
- Provide monthly updates to the ATO to declare continued eligibility.
Businesses with employees should identify eligible employees and provide monthly updates to the ATO.
Moratorium on Evictions:
A temporary moratorium on evictions will be in effect over the next 6 months for commercial and residential tenancies who are unable to pay rent because of financial difficulties due to COVID-19. Also, the Australian Banking Association has announced a new bank loan relief for commercial landlords with loans of up to A$10 million who do not evict their tenants or terminate their leases.
JobSeeker Payment for Sole Traders:
The JobSeeker Payment has been expanded to include a Coronavirus supplement of A$550 per fortnight for the next 6 months to eligible sole traders. All standard waiting periods and asset tests have been waived, and sole traders will still be able to operate their businesses and earn up to A$1,075 per fortnight before their payments will be affected.
Small business owners who want to make use of the JobSeeker Payment should apply through the Services Australia website.
Early Access to Superannuation:
Sole traders whose hours of work or income has fallen by 20% or more due to COVID-19 may access up to A$10,000 of their superannuation, tax-free, this financial year. A further A$10,000 may be accessed next financial year.
Sole traders who wish to access their superannuation should apply via the myGov website.
Leniency for Insolvency and Bankruptcy:
The government has increased the threshold at which creditors can take action against small businesses from A$2,000 to A$20,000 and has increased the mandatory response time from 21 days to 6 months. They have also announced temporary relief for directors from personal liability for trading while insolvent.
Australian Banking Association Small Business Relief Package:
The Australian Banking Association and banks will work together to provide a small business relief package that will defer the principal and interest repayments for loans to small businesses in all sectors that have been affected by COVID-19. This payment deferral will apply to all loan terms and retail loans for a period of 6 months and will apply to small businesses with less than A$3 million in total debt.
Small business owners will not be required to repay the deferred interest in a lump sum at the end of the deferment period but will have their loan terms extended or the level of their loan repayments increased.
At the moment, participating banks include:
- AMP Bank.
- Bank Australia.
- Bank of Queensland Limited.
- Bendigo and Adelaide Bank Limited.
- Commonwealth Bank of Australia.
- Macquarie Bank.
- National Australia Bank.
- Suncorp Bank.
Tax Payment Deferrals.
Small business owners and self-employed individuals will receive some relief from tax obligations on a case-by-case basis if the business is affected by COVID-19. Contact the Australian Tax Office on 1800 806 218 or speak to your tax accountant to discuss your options as deferring tax payments can affect your eligibility for other stimulus packages.
Claiming From Business Insurance.
As a small business owner, you probably have business insurance in the case of any interruptions or cessation of work. Critically analyze your policy or talk to your insurance broker to see if you can claim from your insurance policy under the conditions caused by COVID-19.
If you have business interruption insurance, you will want to check for a Notifiable Diseases clause. This clause is not automatically added to business interruption insurance but may be an extension to the standard cover. A Notifiable Diseases clause is usually defined as a specified list of diseases, un-specified notifiable diseases, or the enforced closure of the insured location by the government for health reasons.
As COVID-19 is a new disease, it will not be in a specified list of diseases, but you may be able to claim under the latter two definitions if your cover extends to Notifiable Diseases.
How can I support my business during the Coronavirus pandemic?
If you are a small business owner in Australia, there are various government support and relief grants you can apply for. You can also have the repayments on your loans deferred.
What government support packages can Australian small business owners apply for to support themselves?
What is the Australian Banking Association's small business relief package?
The Australian Banking Association's small business relief package will defer the principal and interest repayments for loans to small businesses in all sectors that have been affected by COVID-19. This payment deferral will apply to all loan terms and retail loans for a period of 6 months and will apply to small businesses with less than A$3 million in total debt.
How much is offered by the JobKeeper Payment?
The JobKeeper payment is a fortnightly payment of A$1,500 per eligible employee which will be available from March 30, 2020, for 6 months. It is designed to help small businesses, sole traders, and the self-employed whose business operations have been severely impacted by COVID-19.
When will the JobKeeper Payment start paying out?
The first JobKeeper Payments will be made in the first week of May.
Will I still be eligible for the JobSeeker Payment if I am working as a sole trader?
The JobSeeker Payment includes a Coronavirus supplement of A$550 per fortnight for the next 6 months for eligible sole traders. Sole traders will still be able to operate their businesses and earn up to A$1,075 per fortnight before their payments will be affected.
Can I apply for a tax deferral?
Small business owners and self-employed individuals will receive some relief from tax obligations but it will be on a case-by-case basis. You will need to contact the Australian Tax Office on 1800 806 218 or speak to your tax accountant to discuss your options.