SMALL BUSINESS NEEDS CASH NOW, NOT ON A PROMISE

January 23, 2020

Last week I visited Kangaroo Island, almost 50 per cent of which has been severely devastated by the bushfires, and as I visited local businesses, many are wondering just how they can possibly rebuild.
 
Areas like Kangaroo Island, the South Coast of NSW and Gippsland in Victoria are dependent on summer trading in order to remain viable. Whether or not the areas have been directly impacted by the blazes, holiday makers and visitors are staying away due to safety warnings, road closures, fires or smoke hazes. As more than one local small business owner told me, “There’s simply no one around”.  
 
Small businesses in fire devastated areas around the country are desperate for financial help now. Not next week, not the week after that. If we are to stem the cash flow crisis facing small businesses, then the money needs to start flowing.
 
Federal Labor welcomes the government’s small business package for fire affected areas, but holes in the announcement are starting to emerge already as small business raise questions around eligibility for funds that are desperately needed as soon as this week.
 
Concern is mounting that the Morrison Government’s promised package may not be getting to businesses that need it most.
 
Let’s take the announcement of concessional loans for instance. We are hearing that businesses who are not directly affected by the fires are being told they cannot access the loans.
 
Many small businesses remain anxious and uncertain about their eligibility. How do they apply for loans? If they are eligible when will the money start flowing?

Many small businesses in fire affected areas face collapsing as soon as this week, which is why it is imperative small businesses find out as soon as practicable what constitutes “significant” loss of assets and income to know if they are eligible.

The government may have answers to all of these questions, but the message is not reaching communities. The Prime Minister, a marketing man, must work harder to get the information to the people that need it the most.  

Many small businesses also feel the Prime Minister’s language indicated the government was offering them $50,000 grants when the reality is only those businesses directly hit are eligible.

It seems Scott Morrison is simply angling for a headline, while businesses head for the breadline.

When it comes to financial counselling services, the Prime Minister has only provided 10 additional financial counsellors for the 200,000 businesses that may be eligible. That’s one counsellor for every 20,000 businesses, which is completely insufficient. And by the Government’s own estimates, each counsellor is expected to spend an average of 45 minutes with each business.

More questions remain unanswered in relation to this service including if a 30-minute average consultancy time for financial counsellors adequate for individual small business needs? If counsellors are operating from Canberra, what boots-on-the-ground financial counselling will be available? Will counsellors give guidance on the appropriateness of deferred tax arrangements, to avoid a tax shock later in the year? Deferred tax helps profitable businesses, but what assistance can be given to businesses who are marginal due to the sluggish economy?
 
The difficulties confronting small businesses over the coming months will be testing. Major cash flow issues will harm employment and the ability for businesses to simply keep their doors open.
 
That is why, when it is safe to do so, I encourage you to get out there, travel to bushfire affected areas and support the local communities where you can.

This opinion piece was first published in The Daily Telegraph on Thursday, 23 January 2020.