Under the current scheme, businesses with turnovers of up to $50 million can get a government guarantee of 50% for new, unsecured loans for working capital. The maximum loan size is $250,000 per borrower. Loans can be for up to three years and feature a repayment holiday for the first six months. These loans are unsecured, so SMEs don’t have to put up an asset as security. From 1 October 2020, eligible lenders will be able to offer loans under version 2.0 on the same terms as the current scheme with these enhancements:
- Loans can be used for a broader range of business purposes, including to support investment in a period of economic recovery.
- The maximum loan size will increase to $1 million per borrower.
- Loans can be for up to five years and options for a six-month repayment holiday will be at the lender’s discretion.
- Loans can either be unsecured or secured (except in the case of commercial or residential property).
The updated scheme will run until 30 June 2021.
New Instant Asset Write-Off 2.0
The Federal Government increased the instant asset write-off threshold from $30,000 to $150,000 and expanded access to include businesses with an aggregated annual turnover of less than $500 million (up from $50 million). This new take on an existing scheme applies from 12 March 2020 until 31 December 2020, for new or second‑hand assets that are first used or installed, ready for use, during this time period.
But starting from 1 January 2021, the instant asset write-off will revert to a threshold of $1000 for small businesses with a turnover of less than $10 million.
The Federal Government’s Entrepreneurs’ Program is designed to help researchers, entrepreneurs and SMEs commercialise their innovations. It’s open all year round and provides support in the form of capital grants and expert advice. Under the program’s Accelerating Commercialisation Grants, ventures can access up to 50% of expenditure on a project. This is capped at $250,000 for commercialisation offices and eligible partner entities, and $1 million for other applicants. For more information head here.
Export Market Development Grant
If you’re scaling up with export markets in your sights, or shocks to supply chains from the pandemic have opened up overseas opportunities, this could be the grant for you. Administered by Austrade, recipients must spend their own money up front, before seeking this government reimbursement. On eligible promotion expenses, SMEs can get back as much as 50% on outlays over $5000. But the total amount claimed must exceed $15,000. Eligible businesses can put their hands up for a maximum of eight grants. The maximum amount a business can receive in its initial payment is $60,000. The grant year runs with the financial year. More information is available here.
Maintain and nurture your human capital
People are the heart of any business. Let’s look at what the government is doing to help businesses maintain and grow their human capital and resources.
The JobKeeper wage subsidy program to help businesses keep staff launched in March and was designed to run for six months. But a new wave of COVID-19 and the continuing economic ripple effects from the start of the pandemic triggered a rethink. Enter JobKeeper 2.0. This second iteration of the government scheme has an end date of 28 March 2021. Gone is the much-feared financial cliff foreshadowed for September. But it’s not all rosy in the garden. The top two takeaways from JobKeeper 2.0 are that fewer businesses will be eligible, and those that are, will have to pay a higher proportion of their wage bills. JobKeeper 2.0 will take effect after 28 September, ushering in a number of modifications.
Key changes for businesses doing R&D:
- There will be two tiers of JobKeeper payments, that will decrease over the six months between October 2020 and March 2021.
- Employees working less than 20 hours per week will receive the lower tier payment with the higher tier rate reserved for those working more than 20 hours each week.
- The higher rate payment will be $1200 per fortnight from October until early January.
- From 4 January the higher tier payment will then decrease from $1200 to $1000 a fortnight until 28 March.
- For employees working less than 20 hours a week, JobKeeper payments will reduce to $750 per fortnight after September, and then drop to $650 per fortnight from January through to March.
- Turnover eligibility tests will be reapplied twice; once in September and again next January.
- To continue to qualify, businesses with an aggregate turnover of $1 billion or less must prove their turnover has fallen 30%, while businesses with turnovers of $1 billion or more have to show a drop in turnover of 50%.
- To be eligible for JobKeeper 2.0, businesses also need to show they experienced turnover declines in all previous quarters, not just the one they are claiming for.
Spotlight on skills training
The Federal Government’s $1.3 billion wage subsidy scheme to support small businesses with apprentices and trainees has been extended.
The government is pumping a further $1.5 billion into the program, pushing back its end date to 31 March 2021. And now medium-sized businesses with fewer than 200 employees that had an apprentice in place on 1 July will now also be able to claim the scheme’s 50% wage subsidy.
This is definitely one to watch if you have trainees or apprentices working in your business or on your R&D.
Certainty in uncertainty lies ahead
So long as potential vaccines and effective treatments for COVID-19 are still in question, uncertainty is the certainty we have for the months ahead. For start-ups, scale-ups and businesses with R&D, maintaining steady cash flow is the best antidote. If we can help you with a Radium Advance, or if you’d like to discuss the R&D tax refund, please contact us directly on 1800 723 486 or request a call from us today.