Like many businesses in Australia, you may be feeling impact of the coronavirus (nCOV). The best approach is to quickly seek professional help immediately and not take a wait and see approach.
While we don’t know for sure how long the coronavirus threat will last, we know it will have a lasting effect on many businesses. Many fixed costs for businesses, such as wages, rent, utilities, financing costs and statutory liabilities will remain, despite the the anticipated downturn in revenue.
The downturn in sales will have a huge impact on working capital, and those businesses without sufficient reserves may find themselves suffering cash-flow issues. Business operators should seek assistance immediately to try to minimise the impact.
Here’s some tips for businesses impacted by Coronavirus:
Don’t wait: It’s uncertain how long the crisis will last, so build a forecast to understand how long your business can survive under the “new norm”. (We can help with this)
Seek help: If you don’t know what your business options are, speak to someone who can help. Equally, if your mental health is affected, seek help from a health professional.
Engage: Get on the front foot with your customers and creditors and let them know your situation.
Communicate: Talk your stakeholders through the impact on your business and the contingencies you are implementing
Take action: reduce costs where possible to minimise any impact on your cash flow
Think long term: evaluate supply chains and ensure that future access to raw materials, components and finished goods will not be affected by another catastrophe.
Government support available.
The Federal Government has stepped up with a range of support measures, but we are finding that many businesses are having difficulties understanding what the support means to them.
We have provided a snapshot of the support below, but we encourage you to contact us to ensure you have the best chance of accessing this support.
The Government is now providing up to A$100,000 to eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ people, with a minimum payment(s) of A$20,000. The payment(s) will be made via a credit in the Activity Statement System.
Small and medium-sized business entities and NFPs with aggregated annual turnover under $50 million and that employ workers are eligible.
Under the enhanced scheme, employers will receive payment equal to 100% of their salary and wages withheld (up from 50%), with the maximum being increased from A$25,000 to A$50,000. In addition, the minimum payment is being increased from A$2,000 to A$10,000.
An additional payment is also being introduced in the July — October 2020 period. Eligible entities will receive an additional payment equal to the total of all of the Boosting Cash Flow for Employers payments they have received.
This means that eligible entities will receive at least A$20,000 up to a total of A$100,000 under both payments.
Temporary relief for financially distressed businesses
The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and to initiate bankruptcy proceedings against an individual as well as temporarily increasing the time companies and individuals have to respond to statutory demands they receive.
The package also includes temporary relief for directors from any personal liability for trading while insolvent, and providing temporary flexibility in the Corporations Act 2001 to provide targeted relief from provisions of the Act to deal with unforeseen events that arise as a result of the Coronavirus health crisis.
The ATO will tailor solutions for owners or directors of business that are currently struggling due to the Coronavirus, including temporary reduction of payments or deferrals, or withholding enforcement actions including Director Penalty Notices and wind-ups.
Support for immediate cash flow needs for SMEs
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50% to SME lenders to support new short-term unsecured loans to SMEs. This offer will be available from 1 April 2020 and be available for new loans until 30 September 2020. The maximum that can be borrowed under the guarantee facility will be $250,000 on terms up to three years.
Seek help now
As noted earlier, its critical that you move quickly on accessing any support available. We are here to help you understand and apply for the support. Give us a call today if you need help.