Prepping SME clients for end of JobKeeper

Non-bank lender arms brokers with three key questions to discuss with business owners before stimulus is phased out

Prepping SME clients for end of JobKeeper


By Madison Utley

Australia’s largest non-bank SME lender has highlighted three key questions business owners must process before their JobKeeper support finishes, in order to avoid being part of the predicted October spike in insolvencies.

Scottish Pacific group executive Wayne Smith explained, “Whether your government support ends in September, next March or beyond, it’s important to assess your ability to make loan repayments, pay staff without JobKeeper support and take care of ATO debts.

“From what we’ve seen, many small businesses will need to reassess their funding because they’ve been living on the edge even with JobKeeper support.

“It’s understandable, given these are unique business conditions - but let’s not lose sight of the fact that SMEs’ deferred expenses are accumulating.”

According to Scottish Pacific, it’s most important to consider:

  • What support will be lost, and if the business has the cash available to replace it
  • What payments will need to be made from October or March that the business is not making now
  • If there are any pressing creditors ready and able to take action against the business once they are able to

“Your answers to these questions will guide whether you seek extra funding or make a tough call on your business,” said Smith.

“You don’t want the business to accumulate debt if it’s not going to be viable.”

According to Smith, the return to normal operations post-JobKeeper will “hit hard”.

He said, “Insolvencies are at a third of the usual level because banks have remained supportive, the ATO is not winding up businesses, landlords have deferred rent and creditors have been limited in the actions they can take to enforce unpaid debts.

“We’re here to help in this uncertain climate with funding options that don’t rely on using the family home as security, and with quicker approvals and increased flexibility," he added. 

The executive highlighted invoice finance as a funding option worth investigating given that it utilises assets already in the business rather than using the family home for security.

“Put simply, using invoice finance brings forward payment of your invoices so you have cash in hand. You get 80% paid earlier, and the remainder later,” Smith said.

“Now is a good time to think whether your business could benefit from a self-liquidating revolving line of credit facility, rather than further exposing yourself by taking on more loan repayments.”

Business owners and their brokers also have access to the Business Funding Guide, the free resource developed by the ASBFEO and Scottish Pacific which outlines the major SME funding options available and the range of scenarios they suit. 

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