3 questions SME owners should ask themselves before JobKeeper 2.0

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JobKeeper is due for a big shake-up next month, which means if you’ve been relying on it to get your business through these rocky times, you need to start planning ahead now.

With the small business ombudsman and many economists concerned about an “insolvency tsunami” hitting small businesses, it’s critical that you start thinking about your ongoing funding plans now to avoid being swept up in the tide.

JobKeeper support is set to end for many businesses on September 27, while it will continue for other eligible businesses under a reduced amount until March 28.

So with that in mind, you may want to start assessing your business’s ability to make loan repayments, pay staff without JobKeeper support, take care of ATO debts, as well as any other financial obligations.

So, what are the big 3 questions?

Businesses that have been drawing on JobKeeper should start asking the below three questions, says Wayne Smith, Group Executive of SME lender Scottish Pacific.

1. What support will I lose, and has my business got the cash available to replace it?

2. What payments will I have to make from October or March that I’m not making now?

3. Do I have any pressing creditors ready and able to take action against me once they are able to?

Why these questions are so important

The unfortunate fact is that over the coming months many businesses will have a funding gap and have to face some very tough decisions.

“Your answers to (the above) questions will guide whether you seek extra funding or make a tough call on your business,” Mr Smith says.

“You don’t want the business to accumulate debt if it’s not going to be viable.”

Mr Smith says businesses can consider seeking rent reductions, JobKeeper, government grants, and ATO deferments.

“These initiatives have helped many businesses hibernate or trade through the tough times. However it’s important to consider how this will pan out when commercial evictions for non-payment of rent return, and creditors are able to present winding up petitions,” Mr Smith adds.

Financing options you may consider

It’s important to note that the federal government’s Coronavirus SME Guarantee Scheme is being extended, with the initiative allowing lenders to provide eligible SMEs unsecured loans “more cheaply and more freely”.

Mr Smith says another option business owners could consider is Invoice Finance, which makes use of assets already in the business rather than using the family home for security.

“Put simply, using Invoice Finance brings forward payment of your invoices so you have cash in hand. You get 80% paid earlier, and the remainder later,” Mr Smith says.

Now may also be a good time to consider whether your business could benefit from a self-liquidating revolving line of credit facility, says Mr Smith, rather than further exposing yourself by taking on more loan repayments.

Get in touch

As mentioned earlier, if you think you might have a funding gap in your business, it’s good to act in advance – not when you’re scrambling to make ends meet.

So if you’d like to explore some funding options for your business please get in touch today – we’re here to help your business however we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Coronavirus SME Guarantee Scheme is being expanded

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If you’re a small or medium-sized business owner in need of an affordable loan then we’ve got good news: the federal government is expanding the Coronavirus SME Guarantee Scheme to allow businesses to borrow more and for a wider range of purposes.

The scheme, which is in phase one until September 30, allows lenders to provide eligible SMEs unsecured loans of up to $250,000 for up to three-year terms.

It’s got pretty good traction too, with more than 15,600 businesses accepting loans worth $1.5 billion to date.

As such, phase two has just been announced to further assist Australia’s economic recovery from coronavirus.

Hold up. What’s this scheme all about?

The Coronavirus SME Guarantee Scheme basically involves the government guaranteeing 50% of each new loan issued to SMEs by eligible lenders.

This allows lenders to offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association (ABA).

What’s changing?

In a nutshell: SME Guarantee loans will soon be larger, longer-term and for a wider range of purposes.

The second phase of the scheme will kick off on 1 October 2020 and will be available until 30 June 2021. Here are the key changes taking place:

– Loans can be for a wider range of investment, beyond working capital
– Secured lending now permitted (excludes commercial or residential property)
– Maximum loan size increased to $1 million (up from $250,000 per borrower)
– Maximum loan term now five years (up from three years)
– Lenders can now offer a repayment deferral period.

How do I apply?

This is where it can get a little confusing: the federal government has approved 44 lenders to participate in the scheme, which is a lot to choose from.

Fortunately, we can sit down with you and look at your business’s financing needs to help make your decision easier.

So if you’d like to discuss your eligibility and any other details of the scheme, get in touch today – we’re here to help you work through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Why you should care about the new ‘Open Banking’ era

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‘Open Banking’ is now officially upon us. But what does that mean and why should you care? Well, in a nutshell, it’ll be easier and quicker for you to get a better deal on banking products going forward.

With all that’s going on in the world right now, it’s been interesting to see one of the nation’s biggest banking overhauls in recent memory slip a little under the radar.

Legislation came into effect on July 1 that’ll make it easier and more convenient for you to switch banks when you’ve found a better deal on a financial product.

It’s called ‘Open Banking’, and it will allow you to easily share your banking data with your bank’s competitors in order to access more personalised and competitive financial products and services.

Now, on the face of it, this can sound a little off-putting. After all, it’s being drummed into us to protect our data as much as possible these days.

But the good news is that Open Banking keeps the power in your hands: you can choose who to securely share your data with, and when.

How Open Banking changes the current system

Nowadays, most of the transactions you make are done so online.

For example, you likely get paid electronically, you pay your bills online, and you buy most things using a debit or credit card that’s recorded by your bank online.

Now, every time one of those transactions takes place it creates data.

This data is then collected by your bank, stored, and used to understand you better and create products and services that you might like.

This kind of insight gives your bank the inside lane when it comes to securing you as a customer.

Now, let’s say another financial institution offering a financial product, such as a home loan, catches your interest.

This financial institution likely knows very little, if anything, about you.

To find out more about you, and what they can offer you, you’d need to complete quite a bit of paperwork work them.

That includes detailed information on what you earn, what you owe, what you spend, and where you spend it – it can be pretty darn time-consuming.

But imagine if all you had to do is give that new financial institution permission to access the data your current bank already has.

Well, that’s Open Banking. It gives you the power to control who you securely share your data with and how it can be used.

Rolling it out in stages

The Open Banking system will start small but will ramp up over time.

At present, all four major banks are now capable of sharing your data – if you request it – while smaller financial institutions will join over the coming year.

At this stage, however, you can only request that your bank share your deposit and transaction account data, as well as your credit and debit card data, to financial institutions that the ACCC have authorised to receive it.

From November 1 you’ll also be able to share data relating to home loans, investment loans, personal loans and joint accounts.

“This gives consumers control over information banks already collect about them,” explains ACCC Commissioner Sarah Court said.

“Importantly, it allows consumers to share that data with other businesses, such as fintechs, that may be able to provide them more personalised services and competitive offers.”

By the end of the year, the ACCC anticipates there will be dozens of financial companies accredited – meaning more companies battling it out to provide you with the best deal they can.

For open broking, get in touch

Now, it’s important to note that you don’t have to wait until Open Banking is in full swing before checking whether you can apply for a better deal on your home loan.

As you know, we’re always here to take the legwork out of the process for you.

So if you’re overdue for a home loan health check then get in touch today – we’d love to help you out!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Last chance for $150,000 instant asset write-off this financial year

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Keen to buy a vehicle or another asset for your business and immediately write off the cost? You’ve got just a few days left to take advantage of the $150,000 instant asset write-off for this financial year.

While the federal government recently extended the scheme to 31 December 2020, those keen to claim the deductions sooner rather than later will want to beat the June 30 EOFY deadline.

What’s this $150,000 instant asset write-off scheme you speak of?

A few months back the federal government increased the instant asset write-off threshold from $30,000 to a whopping $150,000 as part of its coronavirus economic stimulus package.

Under the scheme, businesses with an annual turnover of up to $500 million can immediately write off the cost of assets such as vehicles, tools, equipment and – thanks to the recent $150,000 threshold increase – heavy vehicles, tractors and machinery.

Basically the scheme allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.

Why the hurry?

As mentioned above, the end-of-financial-year is fast approaching.

The good news is that even if you get the ball rolling on it now, and still miss the deadline by a day or two, you’ll have peace of mind knowing that you’ll qualify next financial year under the 31 December deadline.

So if you’d like help obtaining finance for an asset then please get in touch – we can run you through more details of the scheme and present you with financing options that are well suited to your business’s needs now, and into the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SMEs get instant asset write-off extension, but EOFY deadline looms

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Great news for small business owners: the federal government has extended the $150,000 instant asset write-off to 31 December 2020, but you’ll need to act asap if you want to make use of the scheme this financial year.

A few months back, just as coronavirus was ramping up in Australia, the federal government increased the instant asset write-off threshold from $30,000 to a staggering $150,000 as part of its economic stimulus package.

Under the expanded scheme, businesses with an annual turnover of less than $500 million can immediately write off the cost of new or second-hand assets such as food vans, tools, equipment and – thanks to the recent threshold increase – heavier vehicles such as trucks, tractors, and machinery.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

Why the extension?

Under the scheme, an asset must be installed and ready to use by the deadline (previously June 30) in order to be eligible.

So, by giving a six-month extension (to December 31) the government is giving under-the-pump businesses around the country “additional time to acquire and install assets” – which essentially means a little more breathing room.

There’s still time this financial year

All that said, there’s still time to make the most of the scheme this financial year.

By doing so, you can immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting the cash back sooner means you can re-inject it straight back into other parts of your business.

So if you’d like help obtaining finance before the June 30 EOFY deadline, please get in touch.

We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.