COVID-19: Vital support will help small business survive but more needed if crisis deepens

The Federal Government needs to be prepared to extend support to help struggling businesses owners put their businesses on hold if the COVID-19 health crisis extends beyond six months.

The Australian Chamber of Commerce and Industry applauded the Federal Government’s second tranche of stimulus for small businesses, and proposed a new wave of support should be considered if the economic lockdown looks likely to extend well into next financial year.

“Support for mothballing businesses may be the only way for many to survive,” ACCI CEO James Pearson said.

“That could mean a local retailer could temporarily close their doors, and be given enough support to go into hibernation, so that they can be reinvigorated when the health crisis is over.

“They will need financial support for fixed costs to take the pressure off, for example with meeting obligations to landlords.  An extension of loan repayment holidays is one example of a measure that could help. And government support for workers to retain an employment relationship with their employer, to be available to get the business back on its feet, while still accessing an income is welcome too.”

Mr Pearson said today’s package was unprecedented and vital, giving SMEs a better chance of surviving the crisis and keeping people in jobs.

“Australia is facing a once in a lifetime crisis. Nearly a third of Australia’s population, about 7.8 million people, will be supported by this second tranche  so that’s a huge effort to keep people in jobs.

“These measures, and those announced last week, are essential to helping keep businesses afloat. The money needs to flow urgently.”

Until now, a gap in the lending market has existed for businesses who couldn’t get access to finance through existing sources.

“This has been a big issue for many small businesses struggling to get access to finance,” Mr Pearson said. “Basically they haven’t been able to satisfy existing credit criteria. The Government guarantee means banks will be satisfied the loan will be repaid.

“The fact is this is the best time to borrow. It’s never been cheaper to get a loan. We encourage businesses to use the money not just to survive but, if they can, to have the courage to transform their business models.

“In order for Australia to recover from this crisis businesses must still exist in some form to provide jobs and the goods and services Australians depend on.”

“Potential further tightening of rules relating to “non-essential” businesses such as clubs, hotels and restaurants will decimate an industry that has already be severely impacted by the existing rules.  Business support measures that have been announced, while welcome, will not go far enough for the tourism and hospitality industry.

“Further specifically targeted support measures will be needed.  These industries employ around 10 per cent of the workforce, and they need to still be there when we come through the health crisis.

“It is very difficult to pay people when there is no money coming through the door – we welcome Government stepping in to help businesses keep their people, but we must face the cold hard fact that we will not be able to save every business or every job.

“Businesses and their people need information and options to make the best decisions during this period.  The industrial relations system will need to be flexible to minimise job losses, business regulation, tax and other areas of government will need to be flexible and put the decisions that need to be made in the hands of small business people.”