JobKeeper and Coronavirus SME Guarantee Scheme revamped and extended to 2021
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The Federal Government has announced that it will revamp and extend the JobKeeper payment and Coronavirus SME Guarantee Scheme in order to support businesses and facilitate economic recovery.
JobKeeper extension: tightened eligibility and reduced payments
Originally due to expire on 27 September, the JobKeeper payment will be extended for two quarters to 28 March 2021. However, the government will tighten the JobKeeper’s eligibility criteria and gradually scale down the payment rate.
Eligibility
From 28 September 2020, businesses seeking to claim JobKeeper payments will need to reassess their eligibility under the new eligibility criteria. The key changes are two-fold:
- Businesses will need to prove that they have suffered a decline in actual GST turnover relative to the corresponding period in 2019. For businesses with aggregate turnover less than $1 billion, the required decline is 30%; and
- The decline in actual turnover must be continuous. This will be reassessed on a quarterly basis as follows:
- To claim JobKeeper payment from 28 September 2020 to 3 January 2021, businesses will need to have experienced an ongoing decline in turnover in both June and September quarter 2020 compared to the same periods in 2019.
- To claim JobKeeper payment from 4 January 2021 to 28 March 2021, businesses will need to have experienced an ongoing decline in turnover in each of June, September, and December quarters 2020 relative to the same periods in 2019.
Other eligibility requirements remain unchanged and are available here.
Payment rates
The rate of JobKeeper payments will be scaled down on a quarterly basis and will be divided into two payment tiers based on pre-COVID weekly working hours.
- From 28 September 2020, the JobKeeper payment rates will be $1,200 per fortnight for eligible employees who were working on average at least 20 hours per week in February 2020 and $750 per fortnight for other eligible employees.
- From 4 January 2021, the JobKeeper payment rates will be $1,000 per fortnight for eligible employees who were working on average at least 20 hours per week in February 2020 and $650 per fortnight for other eligible employees.
Coronavirus SME Guarantee Scheme
The Federal Government will also revamp the loan guarantee scheme for small and medium businesses, raising the cap from $250,000 to $1 million while extending the repayment period from three to five years. The revamped scheme will run from October 1, 2020, to June 30, 2021.
Initially announced in March, the Coronavirus SME Guarantee Scheme offered small businesses unsecured loans of up to $250,000, guaranteed 50-50 by the government and banks, and payable in three years with an initial six-months repayment holiday. The scheme was projected to deliver $40 billion worth of loans, but the Treasurer Josh Frydenburg revealed that only $1.5 billion were taken up, mostly by businesses needing credit to meet the JobKeeper’s upfront wage payment requirement.
The original scheme’s under-subscription was attributed to its limited scope, is only available to boost the working capital of cash-strapped businesses. To address this, the revamped program will expand the use for which the guaranteed loan can be put, allowing recipients to fund a wider range of business and investment activities.
The Treasurer said the revised scheme will give small businesses ‘access to more money at lower rates and for longer periods’, and will help them ‘get back on their feet, restructure and invest for their future’. The changes were welcomed by Anna Bligh, head of the Australian Bankers’ Association, who said it would open up the scheme to more small and medium businesses needing help.
The original scheme is available until September 30, 2020, and will then be supplanted by the revamped scheme which will run from October 1, 2020, to June 30, 2021.
The team at Collins Wentworth is experienced in business financial matters. If you wish to know more about how we can assist you, contact us today.
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