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May 15, 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With government support measures being withdrawn, banks continuing to subject small business borrowers to onerous credit assessment processes, rent relief ending and the impact of recent lockdowns and border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

Greater Sydney under COVID related restrictions

NSW Premier Gladys Berejiklian has just announced that greater Sydney area will go into lockdown until next Monday.

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Brisbane Airport green zone breach update

A story The Echo posted this morning about the breach at Brisbane International Airport has been updated as the Chief Health Officer Dr Jeannette Young, has declared the international terminal a venue of concern.

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Anzac Day commemorated across Australia

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Ballina Council debates waiving Seagulls debt

The matter of over $15,000 owing to Ballina Shire Council by the Ballina Seagulls Rugby League for unpaid rates was discussed at council's last meeting.

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Vehicle sanitisation stations roll out

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Dili facing double disaster

The capital of East Timor, Dili, is reeling after flood waters swept through the city on the weekend, leaving at least 27 dead. The President of East Timor, Francisco Guterres Lú-Olo, described the floods as a 'great calamity'.

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Northern Rivers COVID restrictions lifting at midnight

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COVID testing encouraged in the NNSWLHD

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Face masks for Ballina and Byron businesses

As masks become harder to find across the Northern Rivers following the latest COVID-19 health alert, NSW Health has provided masks for business operators in Ballina and Byron Shires.

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UPDATE: Thousands of COVID tests conducted across northern rivers

The Byron Shire community and visitors have come forward in large numbers for testing following the alert of two COVID positive visitors coming to Byron Bay last weekend.

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