As the JobKeeper program comes to close at the end of March, the Morrison Government has announced additional measures to support the economic recovery and provide continued assistance to businesses, workers and regions still experiencing difficulties. Some of the more relevant measures for businesses will be examined in further detail, but clients are encouraged to contact our office should they have any questions.
SME Loan Guarantee Scheme
The Government has expanded and extended the SME Loan Guarantee Scheme to provide support of up to $40 billion in lending to small and medium enterprises. An increase in the Government guarantee will see the current 50/50 split between Government and the banks increase to an 80/20 split.
The size of eligible loans will increase from $1 million to $5 million and businesses with a higher turnover will also become eligible with the maximum eligible turnover increasing from $50 million to $250 million. Maximum loan terms under the expanded Scheme will also be increased from 5 to 10 years and will also allow lenders to offer borrowers a repayment holiday of up to 24 months.
The Scheme may be used by eligible businesses to refinance their existing loans. This will allow SMEs to access the more concessional interest rates available under the program and to better manage their cash-flows through an extended loan term and lower combined repayments.
The Scheme is open to recipients of the JobKeeper payment between 4 January 2021 and 28 March 2021. Business that have accessed loans in Phases 1 and 2 can also apply for loans under the scheme. Loans will be available from 1 April and must be approved prior to 31 December 2021.
The Government’s HomeBuilder program has been extended to 31 March 2021. The scheme is expected to support the construction or major rebuild of an additional 15,000 homes.
There is also an extended deadline for all applications to be submitted, including those applying for the $25,000 grant and the new $15,000 grant.
Applications can now be submitted up until 14 April 2021 (inclusive). This will apply to all eligible contracts signed on or after 4 June 2020. The property price cap for new building contracts has also been increased in Victoria to $850,000. For further information please refer to our website.
Changes to Insolvency Framework
The Government has made changes to corporate insolvency laws which are intended to reduce costs, cut red tape and help more small businesses recover from the pandemic. The reforms introduce a new, simplified debt restructuring process.
The changes reflect a ‘debtor in possession’ model and means that the director of a debtor company remains in place during the relevant moratorium period and does not have to hand over control of the business to an external insolvency accountant.
This new model provides for eligible businesses to work with specialist restructuring practitioners to restructure existing liabilities under a restructuring plan approved by creditors.
These measures apply to incorporated businesses with liabilities of less than $1 million – covering around 76% of businesses subject to insolvencies today, 98% of which have less than 20 employees.
JobMaker Hiring Credit scheme: Claims open from 1 February 2021
The JobMaker Hiring Credit is being administered by the ATO and provides a wage subsidy payment directly to employers as an incentive to employ additional job seekers aged 16 to 35 years.
Registrations for the JobMaker Hiring Credit scheme opened on 7 December 2020, and claims for the first JobMaker period can be made from 1 February 2021, provided employers are registered and meet all eligibility requirements.
Employer eligibility requirements include that applicants:
- are up to date with their tax and GST lodgment obligations for the last 2 years;
- have not claimed JobKeeper payments for a fortnight that started during the JobMaker period; and
- are reporting through Single Touch Payroll.
The ATO will be writing to employers who have registered for the JobMaker Hiring Credit from 15 January 2021, encouraging them to check that they meet all JobMaker Hiring Credit eligibility criteria before they claim.
Should clients have any queries regarding the various measures outlined above please contact your accountant for further clarification and advice.