The Federal Government is extending its support for small and medium businesses to help them through the recession and adapt to the post-pandemic economy.
The ultimate objective for these schemes, including the JobKeeper update, which is expected to be announced on Thursday, is to get back into a situation where businesses can pay for their employees’ wages out of their income.
What is the extended loan scheme?
Small and medium businesses will now have greater access to a $40 billion loan scheme to support recovery. The scheme allows banks to provide low-interest rate loans of up to $1 million for terms of up to five years whereas previously it allowed three-year loans of up to $250,000.
Only $1.5 billion of the initial $40 billion allocated in March has been used. With over 15,600 businesses accessing loans so far, the major banks have backed the government's revamp of the scheme to extend this support.
The banks also appear willing to lend to thousands more companies, with their risks reduced because half the loan value would be guaranteed by the Commonwealth.
While the original scheme was intended to offer working capital for companies until September 30, the revised terms allow loans for business investment until June next year, overlapping with the next phase of income support.
Treasurer Josh Frydenberg has named tourism, arts and recreation, hospitality and aviation as the industries facing the greatest hardship. Further support is expected to be announced for “particularly severely impacted” employers.
When can we expect more information?
Mr Frydenberg will give an update on the economic impact of the coronavirus on Thursday. He is also expected to announce an overhaul of the JobKeeper wage subsidy scheme.
Finance Minister Mathias Cormann said on Sunday that the Government would continue income support beyond the original expiry date for JobKeeper at the end of September. The eligibility of the scheme is anticipated to be updated to determine which businesses should still be receiving support.
More information to come as the situation continues to develop.