New research conducted by a small business lender has highlighted the “increasing and undue pressure” small businesses are facing under the Australian Tax Office’s (ATO) repayment plans for money owed – and how brokers are well-positioned to help.
“We found that very few small businesses fully understand how the ATO works in this area,” said Dan McCarthy, head of sales and partnerships at Sail Finance.
“At the moment, the flogged horse in commercial finance in Australia is all about small businesses not having access to funds. What we see on the lending side is most have more than enough funds available. It’s what they actually do with those funds that presents the most problems, particularly with the ATO.”
“More support and education around the ATO’s processes must be available to SME customers, or mandatorily administered through the commercial broker network as part of the business registration process.”
The “real gap” revealed by Sail's research means there is significant market share to claim for brokers willing to invest the time and effort to educate themselves on the workings of the ATO. Through doing this, they can provide an unmatched level of service to SMEs currently floundering and in need of assistance.
While the onus should be on the ATO, it seems unlikely any government-generated resources will be forthcoming. As such, brokers should be bringing the issues presented by GST and direct ATO repayments to their small business clients, discussing how repayments on a SME loan interact with the ATO payment plan, and coming up with a strategy for future success.
However, according to Sail customers, there’s “not a lot of that happening.”
With 75% of the brokers surveyed in the study believing the ATO’s repayment plan for small businesses has negative effects on their cashflow and a further 62% agreeing most small businesses on an ATO payment plan suffer additional financial hardship as a result, there is a huge need still to be met.
While McCarthy hopes to someday see the ATO take action to “fix the problem at the source,” he feels the broker channel can be “advocators of the educational information” SMEs need now.
He said, “Brokers should scour the internet, speak to their network, speak to their lending partners, even appeal to the ATO itself. There’s no real one source of truth that has the answers or the path to success in terms of understanding the ATO.”