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Byron Shire
January 25, 2021

Access to capital critical for small business

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Many businesses and in particular small business, have been really struggling under the weight of COVID-19 and with the rollback of JobKeeper, things have just gotten tougher.

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell is urging the Federal Government to establish a revenue-contingent loan scheme for small businesses, to provide them with the cash flow they need to survive the next 12 months.

With government support measures being withdrawn, banks continuing to subject small business borrowers to onerous credit assessment processes, rent relief ending and the impact of recent lockdowns and border closures, Ms Carnell says access to finance could mean the difference between life and death for many small businesses.     

‘Unfortunately it’s a perfect storm scenario – especially for those small businesses that haven’t been able to fully recover from the COVID crisis,’ Ms Carnell says.

‘Access to credit will be critical to keeping those otherwise viable small businesses afloat, particularly over the coming months as support measures are phased out and the bills start flowing in again.

A revenue-contingent loan program

Ms Carnell is calling on the Federal Government to introduce a revenue-contingent loan program for small businesses, similar to HECS, requiring borrowers to repay when their turnover reaches a designated level.

The loan would be Government-funded and capped at a percentage of the small business’ annual revenue. Applicants would need to satisfy a viability test conducted by an accredited adviser to be eligible.

‘Sudden lockdowns and border closures have heavily impacted small businesses in recent weeks – it’s no wonder they are scared to take on additional bank debt given conditions can deteriorate so rapidly,’ Ms Carnell says.

‘Even in the best of times, small businesses have struggled to secure finance. Taking into account the enormous challenges they are now facing, the fallout of insufficient working capital could be devastating, not only for small business owners and their staff, but for the broader economy.

‘The latest ASIC data shows external administrator appointments were up by 23% in December 2020 and economists are predicting the number of businesses entering voluntary administration to rise this year.

‘A revenue contingent loan scheme would give small businesses the confidence they need to seek funding, so they can survive and employ again. It’s essential to Australia’s economic recovery’.

 


Recent stories, information and updates regarding COVID-19

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The Health Services Union has called on Lismore City Council to reconsider a decision to cancel free all-day street parking at Lismore Base Hospital.

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Access to capital critical for small business

Many businesses and in particular small business, have been really struggling under the weight of COVID-19 and with the rollback of Jobkeeper, things have just gotten tougher.

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Meaningful lockdown more satisfying than busyness

New research shows people who pursue meaningful activities – things they enjoy doing – during lockdown feel more satisfied than those who simply keep themselves busy

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UK variant of COVID-19 linked to hotel cleaner

Queensland Health says that the partner of the quarantine hotel cleaner who tested positive to the UK variant of COVID-19 on 7 January 2021, has also tested positive to COVID-19.

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Former MLC critical of councillors in NYE aftermath

Former Greens MLC Ian Cohen has lashed out at councillors for their lack of preparation for NYE.

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Tweed mayor supports Brisbane lockdown

The Mayor of Tweed Chris Cherry says she supports the swift action of the Queensland Government in introducing a 3-day lockdown of the Greater Brisbane area in response to a COVID-19 case.

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The Greater Brisbane lockdown restrictions

Queensland Health has clarified transit restrictions in place from 6pm last night (Friday, 9 January), limiting incoming and outgoing movements from the Greater Brisbane Area.

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Three day lockdown for Greater Brisbane announced

The Queensland Government has announced that Greater Brisbane will go into lockdown for three days, while contact tracers work to ensure the UK strain of COVID-19 is not circulating in the community.

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PM Morrison on vaccine rollout plan

The Australian Government has again brought forward the proposed rollout of the COVID-19 vaccine.

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Queensland Health confirms latest COVID case has UK variant strain

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