A HECS-style loan scheme for businesses, currently being considered by the Treasury, would provide a lifeline for many industries recovering from the economic shock of COVID-19, says the small business ombudsman.
According to The Australian, the government is currently considering a revenue-contingent business loan scheme to support businesses after JobKeeper expires at the end of March.
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, had previously called for the government to consider such loans, where borrowers start repaying when their turnover reaches a designated level.
Under the ASBFEO’s proposal, the loan would be federal government-funded and capped at a percentage of the small business’s annual revenue.
Applicants would need to satisfy a viability test conducted by an accredited adviser to be eligible.
Ms Carnell said the Treasury’s consideration of such loans was welcome, and would be vital once other government support measures taper off.
“Access to credit will be critical to keeping small businesses afloat as various government support measures are withdrawn, rent relief ends and those overheads start to pile up,” Ms Carnell said.
“We know that many small businesses haven’t 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 in the best of times, small businesses have struggled to secure finance. Taking into account the enormous challenges that they are now facing, the impact of insufficient working capital could be devastating for the small business owner and staff, not to mention the broader economy.
“A revenue-contingent loan scheme would give small businesses the confidence they need to seek funding so they can survive and employ again.”
05 February 2021