Financial Support for Businesses, Companies and Not-for-profits
- 12 January 2021
- Posted by: Terry Rogers
- Categories: Accounting & Tax, Business Strategy, Corporate Advisory
The Government’s economic response will support households and business through the period ahead. It is designed to support businesses in managing short-term cash flow challenges, provide support to individuals, severely affected communities and regions, to ensure the continued flow of credit in the Australian economy and to ensure that employers can maintain connections with employees during this difficult period.
If your business has been significantly impacted by the Coronavirus you will be able to access a wages subsidy to continue paying your employees. Under the JobKeeper program, you will be able to claim a fortnightly payment of $1,500 per eligible employee from 30 March 2020, for a maximum of six months. This assistance will help you keep staff and will help you restart when the crisis is over.
Boosting cash flow for employers
The Government is providing temporary cash flow support of up to $100,000 for eligible small and medium-sized businesses, and not-for-profits (NFPs) that employ staff to help with their cash flow so they can keep operating, pay their rent, electricity and other bills and retain staff. This will be done through two sets of cash flow boosts, with the first delivered from 28 April 2020, through credits in the activity statement system. Eligible businesses do not need to apply with a separate form.
Financial support for not-for-profits
The JobKeeper Payment will provide a wage subsidy to eligible employers and the self-employed, who have experienced a decline in turnover as a result of the Coronavirus. NFPs (including charities) are eligible to apply for the Scheme. The JobKeeper Payment will help to offset the cost of ongoing employees and will encourage employers to maintain a connection with employees that have been stood down.
Support for immediate cash flow needs
Under the Coronavirus SME Guarantee Scheme, the Government will provide a guarantee of 50 per cent to SME lenders to support new short-term unsecured loans to SMEs. The Scheme will guarantee up to $40 billion of new lending. This will provide businesses with funding to meet cash flow needs, by further enhancing lenders’ willingness and ability to provide credit. This will assist otherwise viable businesses across the economy who are facing significant challenges due to disrupted cash flow to meet existing obligations.
Supporting flow of credit for small business
The Government is cutting red tape by providing a temporary exemption from responsible lending obligations for lenders providing credit to existing small business customers. This reform will help small businesses get access to credit quickly and efficiently.
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 the time companies 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 temporary and 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.