According to The Australian, the government is currently considering an income-tested business loan program to support businesses after JobKeeper’s expiration in late March.
Australia’s small business and family-owned ombudsperson Kate Carnell previously called on the government to consider such loans, where borrowers start repaying when their turnover reaches a certain level.
According to ASBFEO’s proposal, the loan would be funded by the federal government and capped at a percentage of the small business’s annual income.
Applicants will need to pass a viability test conducted by an accredited advisor to be eligible.
Ms Carnell said the Treasury’s review of these loans was welcome and would be vital once other government support measures wore off.
“Access to credit will be critical to keeping small businesses afloat as various government supports are removed, rent relief ends and those overheads begin to pile up,” said Ms. Carnell.
“We know that many small businesses have not been able to fully recover from the COVID crisis, so this targeted support measure could mean the difference between life and death for them.
“Even at the best of times, small businesses have struggled to get financing. Given the enormous challenges they currently face, the impact of insufficient working capital could be devastating for the owner and staff of the small business, not to mention the economy in general.
“An income-tested loan program would give small businesses the confidence they need to seek financing so they can survive and re-employ. “
Jotham Lian is the Editor-in-Chief of Accountants Daily, the leading source of news, analysis and information for Australian accountants.
Prior to joining the team in 2017, Jotham wrote for a range of national titles including the Sydney Morning Herald and Channel NewsAsia.