July is always a significant month on the financial calendar - start of new financial year, tax time and often the introduction of a new set of changes to a range of fees and charges. But 2020 is a year like no other and July 2020 is even more significant as a result of the coronavirus pandemic.
According to the Prime Minister’s Roadmap to Recovery that he announced in a May statement, July should have been the time that the entire economy, with the exception of international travel and some other areas, was reopened.
But the unpredictable nature of the virus and the year continues to play out and with new outbreaks in Victoria and NSW many businesses and communities are seeing more not less restrictions being put in place.
July is also the half-way mark for one of the Federal Government’s signature coronavirus support measures – JobKeeper – and the time they said they would issue an announcement on the future of the program. Many businesses have been relying on JobKeeper and the 21 July announcement was welcomed.
The team at Jade Equipment Finance keeps a close eye on announcements that may impact our customers and as we have done throughout the COVID-19 crisis, we bring you this update on a number of key government initiatives which may affect your business.
Extension and Changes to JobKeeper
JobKeeper has been a lifesaver for many businesses throughout the coronavirus crisis and many will be extremely relieved to hear that the program is being extended beyond the original expiration date of 27 September, but with alterations. At a news conference on 21st July, the Prime Minister and Treasurer announced the changes which will affect around 900,000 businesses and millions of their employees
Updates to JobKeeper include:-
- Instead of one flat rate payment for all employees, there will now be two levels of payments.
- One level applies to full-time employees and a lower payment for part-time employees, ie working under 20 hours per week. The employment status is based on that employee’s status as of 1 March 2020.
- The program will extend through the March 2021 quarter.
- From 28 September to 31 December 2020, the payment for the tier 1 (full-time employees) reduces from $1500 each fortnight to $1200 each fortnight. From 1 January 2021 to late March 2021 it will reduce to $1000 each fortnight.
- From 28 September to 31 December 2020, the payment for the tier 2, part-time employees, reduces from $1500 each fortnight to $750 each fortnight. From 1 January 2021 through to the late March expiry date it will reduce to $650 each fortnight.
- Businesses will need to reapply each quarter to continue receiving the benefit. Re-application will require businesses to demonstrate reduction in turnover based on the guidelines for their size and category of business.
You can see what is required by your business at ATO. If you do wish to continue on JobKeeper, we emphasise you will need to reapply and meet the guidelines.
Changes to Government Guaranteed SME Loans
In April 2020 the Government announced a loan support scheme for small businesses which was also due to expire at the end of September. This Coronavirus Small and Medium Enterprises Guarantee Scheme has also been extended with a phase 2 coming into play from 1 October with an expiry date of 30 June 2021.
Under this scheme, the government guarantees 50% of unsecured loans to eligible businesses for purposes as outlined in the guidelines. This is not a loan by the government to business or any type of grant. It is for loans which are made by businesses and approved by the government-approved banks and lenders. 44 lenders have been approved to provide the scheme and Jade Equipment Finance is accredited with many of these.
So essentially, you go through the loan application process and at the same time apply for the government backing as security against the loan.
Originally this was for unsecured loans for working capital purposes. However, in stage 2 the guidelines and eligibility criteria have been amended and now include ‘investment’. We advise businesses to refer to the details in regard to criteria and eligibility but this may include investment in equipment.
Jade Equipment Finance may be in a position to assist you with finance for your equipment purchase under this scheme. Or if this does not suit your business, we can source equipment finance through one of our many accredited banks and lenders.
Expiry Looming for Loan Deferrals
In the early stages of the coronavirus crisis, a number of banks and many other lenders providing loan deferrals which in most cases were for a 4 month period. For many - that 4 months is nearly up. Lenders have been updating us on their approach to this looming deadline with some advising that were in contact with customers to discuss their individual situations.
Some lenders are offering extensions but stress that the extensions are not automatically applied. So if this applies to you, it’s time to get in touch with your lender and update your arrangements.
Some of the changes and extensions and expansions to programs may represent a benefit to your business and signal the time to get on with your equipment investments.
To discuss finance for all types of equipment please contact Jade Equipment Finance on 1300 000 003
DISCLAIMER: THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. INFORMATION ON INDIVIDUAL VEHICLE SPECS IS SOURCED FROM THE MANUFACTURER'S WEBSITE. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN THE PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.