3 questions SMEs should answer ahead of JobKeeper 2.0.
SMEs should be able to answer three key questions about how they will fund themselves ahead of the scheduled scaling-down of JobKeeper 2.0.
According to Scottish Pacific, Australian SME Loans Provider, small businesses should be able to answer these three questions in relation to getting money back into the business ahead of JobKeeper 2.0 scaling-down or phasing out for many:
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?
The SME lender also encouraged businesses to take the ATO deferments, rent reductions, JobKeeper and other government grants on offer, wherever eligible. “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,” group executive Wayne Smith said.
“The government’s SME loan scheme has been extended, but in such an uncertain environment, who can blame business owners for not wanting to go further into debt?”
According to Mr Smith, with ASBFEO Kate Carnell and many economists concerned about an approaching “insolvency tsunami”, it’s crucial not to delay asking these questions.
“Whether your government support ends in September, next March or beyond, it’s important to assess your ability to make loan repayments, pay staff without JobKeeper support and take care of ATO debts,” Mr Smith said.
“From what we’ve seen, many small businesses will need to reassess their funding because they’ve been living on the edge even with JobKeeper support. “It’s understandable, given these are unique business conditions, but let’s not lose sight of the fact that SMEs’ deferred expenses are accumulating.”
Mr Smith said many businesses will have a funding gap, and how they bridge this gap and bring working capital into the business will be crucial.
“Your answers to these questions will guide whether you seek extra funding or make a tough call on your business,” he said. “You don’t want the business to accumulate debt if it’s not going to be viable.”
“Insolvencies are at a third of the usual level because banks have remained supportive, the ATO is not winding up businesses, landlords have deferred rent and creditors have been limited in the actions they can take to enforce unpaid debts.”
Remember, we’re here to help.
If you require assistance in reviewing your business current position, or making decisions on the future of your business, talk with your Highview accountant. We’re here to help guide you through this complicated environment.
Source: mybusiness.com.au/finance