The Federal Government has extended the life of JobKeeper but also reduced the payments. Here, small business lender OnDeck Australia looks at what it means for your business.
On 27 September 2020, JobKeeper as we know it (JobKeeper 1.0) will come to an end and be replaced by its successor JobKeeper 2.0, which will continue for another six months through to 28 March 2021.
It’s welcome news with research from OnDeck finding that 92% of small businesses have been impacted by the Coronavirus. Mr Cameron Poolman, CEO, OnDeck Australia says, “Among those small businesses negatively affected by the pandemic, 47% say they have been ‘severely impacted’. Over one in three (34%) of these businesses expect it could take at least 12 months, possibly longer, to recover.
“The extension of JobKeeper is especially valuable for those businesses with a longer timeframe to recovery.”
Navigating JobKeeper 2.0
JobKeeper 2.0 is a little more complex than its predecessor. The required fall in GST turnover percentages will remain the same at:
- 30% for businesses with aggregated turnover of $1 billion or less
- 50% for businesses with aggregated turnover of $1 billion or more, and
- 15% for registered non-profits.
The key difference is that under JobKeeper 2.0, the payment rate will fall across two tiers:
- Under Tier 1
Eligible employees who worked, or business participants who were actively engaged, in the business for 20 hours or more per week on average, will be allocated $1,200 per fortnight until 3 January 2021. After this, they’ll receive $1,000 fortnightly until 28 March 2021.
- Under Tier 2
Eligible employees who worked, or business participants who were actively engaged, in the business for less than 20 hours per week on average, will be allocated $750 per fortnight until 3 January 2021. After this they will receive $650 per fortnight until 28 March 2021.
Changes to business decline
Anne Nalder, Founder and CEO of the Small Business Association of Australia (SBAA), says, “Further changes include the business turnover and employee eligibility tests.
“From 28 September 2020, businesses will have to demonstrate that they’ve experienced a decline in GST turnover during the September quarter only, compared with the same quarter in 2019, rather than multiple quarters.”
Eligibility for JobKeeper 2.0 will be re-assessed in January 2021. Workers will also qualify if they were employed on 1 July 2020, rather than on 1 March 2020. These changes will apply across the country.
The need to work smarter
The two-tiered payment system is designed to allow businesses to adjust to the ‘new normal’ operating environment, and align payments to the incomes of employees before the onset of COVID-19.
However, Nalder notes, “Australia is officially in recession, and all of us have to work smarter, be innovative and provide exceptional customer service.”
She adds, “JobKeeper has been a life saver for many. As some businesses may no longer be eligible, small business owners need to plan by taking a hard look at their cash flow.
Nalder suggests conducting an audit to see where businesses can trim the fat and recommends keeping an eye on invoices to ensure they are paid on time or as close to as possible. She cautions that cutting costs shouldn’t mean compromising on service. “If businesses employ staff, they must ensure their team is trained in customer service and care, and to work smarter,” notes Nalder.
Subsidy versus sustainability
2020 has delivered tremendous challenges to the SME sector, but small businesses have always had the advantage of being more nimble – and quicker to innovate, than their larger peers. OnDeck’s online COVID-19 Recovery Hub, which features case studies of SMEs that have adapted to the pandemic, is testimony to this.
Poolman notes, “We are seeing some small businesses enjoy tremendous results as consequence of exploring different revenue opportunities or embracing new technologies. It’s about thinking outside the square and taking early action.”
For some businesses, Nalder says “a loan may well be the answer”, and it can be the source of funding an SME needs to invest in more productive equipment, explore new product lines or upskill staff.
At a time when speed of response matters, OnDeck’s streamlined loan application process and rapid turnaround times mean SMEs can have access to finance as fast as one business day. Contact us today on 1800 676 652 to find out more.
OnDeck's COVID-19 Recovery Hub
Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at September 2020. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.