Unlocking the Economic Impact of COVID-19: Business Support Deadlines Imminent

 

The economic impact of COVID-19 is now set to be more devastating with the reintroduction of lockdown in Victoria, which has again forced businesses to either close or drastically limit capacity and service offerings. Given that the economic and legal measures the government has taken in recent months are due to expire at the end of September, the scene is set for the perfect storm unless further measures are taken by the government to unlock the economic pressure on businesses.

Since 11.59 pm on 8 July Victorians have found themselves in a second round of Stage 3 lockdown for 6 weeks, a little more than one week into the new financial year and just over one month after restrictions were eased on 1 June 2020.

Mechanisms to assist companies and businesses to remain viable during the pandemic, such as JobKeeper, the relaxation of insolvency rules and the extension of the safe harbour regime for company directors, have ensured some certainty of income and have postponed a tsunami of insolvency actions against companies under cashflow stress.

However, these measures are due to expire in less than three months. By the end of September, JobKeeper payments will cease, directors’ extended protections against insolvent trading will expire and the extensions afforded to statutory demands and insolvency rules will lapse. Rent relief for commercial tenants and land tax concessions for eligible landlords are also due to come to an end in late September 2020.

Latest Business Support Package Announcement

The Victorian Government has indicated that budgets are currently being reconsidered to determine whether current support measures for business will be extended or other relief will be offered. The current hard stop on the current relief measures will cause further financial hardship for businesses and the economy alike. It’s going to be a fine balancing act.

The Andrews Government announced today a  $534 million Business Support Package to assist those hit hardest by the latest COVID-19 restrictions. The package, announced by Victorian Treasurer Tim Pallas and Minister for Industry Support and Recovery, and Tourism, Sport and Major Events, Martin Pakula, designed in consultation with the Victorian Chamber of Commerce and Industry, includes:

  • Expansion of the Business Support Fund to more than 80,000 eligible businesses with a new $5,000 grant available to all areas under Stage 3 restrictions;
  • $30 million fund for hospitality;
  • $26 million in mental health support for small businesses;
  • $10 million business mentoring program;
  • $40 million capped fund for regional tourism businesses to cover the costs of refunds;
  • $20 million CBD Business Support Fund; and
  • More payroll tax relief – those up to $10 million can defer liabilities for first half or FY20/21

Get Ready to Get Through Round Two

It is clear that the impact on the economy can change on a daily basis with the imposition, increase or easing of restrictions changing the business landscape at a rapid pace. Now, more than ever, businesses must ensure they have the systems and processes in place to adapt to these changes, over which they have very little or no control.

Ensure you lock in your relationships with your supply chain and other stakeholders. Let them know of your pressures and come to an agreement about how you will move forward. Document any changes to existing agreements and keep lines of communication open.

Many businesses have achieved tremendous results by pivoting to adapt and accept a new ‘Covid Normal’ in order to sustain some revenue and preserve their very existence. Ensure you seek advice early to put in place further safeguards to help your business get through this next round of challenges.

We will continue to offer obligation free telephone consultations to provide support, strategic advice and assistance to business leaders and owners that are navigating their way through the next wave of economic uncertainty.

We are here to talk business, strategy or to just check in and make sure you’re doing OK – by phone or virtually, of course.

Wishing everyone good health. Keep well.