COVID 19 Survival for SMEs

Empowering SMEs (Issue 053)

This Australian government has now released three stimulus packages to assist small businesses and medium-sized enterprises to survive the COVID-19 coronavirus.

Most small and medium-sized business operators will require the proactive assistance from your accountant/business advisors to guide you through these challenging times so as to ensure that your business is intact and able to operate efficiently when this crisis is over.

The development of a COVID-19 Survival Plan is a very important part of the process relative to the development of a series of strategies to enable businesses to survive.

The COVID-19 Survival Plan would include details of your business’ response to the various Australian government programs that have been implemented as part of the stimulus packages including:

  • "Boosting Cashflow” - you do not have to apply for this as the payment will be calculated by the Australian Taxation Office when your business' Business Activity Statement is lodged. Your business could receive up to $50,000, calculated on 100% of the PAYG tax on your employees' wages and salaries.
  • "JobSeeker Payment Scheme" – you have to apply to be registered for this scheme which involves the payment to your business of $1,500 per fortnight for your employees who you had engaged on 1 March 2020 on either a full-time, part-time or casual employees who meet the specific eligibility requirements of having been employed by your business for, at least, 12 months.

The eligibility for the JobSeeker Payment Scheme is that your businesses income must have decreased by 30% when compared to a similar month or 3 monthly period (to coincide with your Business Activity Statement lodgement requirements).  If there were any abnormalities relative to your business’ income in 2019, you can make representations to the Australian Taxation Office for an alternative method of calculation.

  • If your business has less than 20 full-time employees and you employ apprentices/trainees, then you can register to receive an apprentice/trainee subsidy which is calculated as 50% of the wage payable to the employee/trainee for the nine-month period January – September 2020, up to a maximum payment of $21,000.
  • Once you have gained an understanding as to what your business' potential benefits will be from these government strategies, I recommend that you proceed with the preparation of your COVID-19 Survival Plan by analysing the following items:
  • sales income expected week by week for the next 26 weeks
  • review of stock to identify whether cash could be generated by holding a stock sale
  • review of surplus assets to determine whether these could be sold to generate cash
  • analysis of debtors to ensure that all debtors' accounts, outside your normal trading terms, are followed up to try to get them to pay as this will generate additional cash

Your accountant can assist you in the process relative to your survival plan and then calculate the Budget and Cashflow Forecast for the next 6 months or 12 month period.

You will then be in a position to consider whether you wish to avail yourself of the possibility of borrowing up to $250,000 from the special Coronavirus SME Guarantee Scheme which has been established by the Federal Government, Reserve Bank and Individual Banks.

The key strategy is to ensure that you're proactively developing a "COVID-19 Survival Plan" to ensure that your business will be able to continue to operate when this disaster has ended.

We are presenting a complimentary special webinar for small and medium-sized enterprises - "Understanding the Government's Stimulus Package As It Relates To SMEs" on Wednesday 8th April at 11:30am AEST.  Please accept our invitation to attend – click here.

You are welcome to visit our website - ESS Small Business - Survival in Difficult Times to gain an overview of the products that we have developed to help you survive these challenging times.

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Episode 53 - COVID 19 Survival for SMEs

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