Where’s my money? Why is it taking so long to get COVID-19 stimulus cash into business bank accounts?

Last week, the federal government’s second coronavirus stimulus package was revealed, promising thousands of dollars in tax rebates for small business, as well as subsidies for apprentice wages, 50% loan guarantees and early access to superannuation.

The package has been picked apart, and its flaws identified. But many of the stimulus measures (particularly the ones that will see dollars hitting bank accounts) aren’t available yet. Most won’t be until at least the end of next month.

And for a small business or startup that’s struggling in the new world of COVID-19, a month feels like an awfully long time.

So, what’s going on here? How complicated can it really be to dish out a potentially life-saving lump sum that was needed, like, yesterday?

Stacey Price, business accountant and founder of Healthy Business Finances, says all she can do is make a guess.

“We’re still all muddling through it as well,” she says.

But she does have a working theory.

“My view is that the main government business stimulus package is to do with keeping people in jobs,” she explains.

“The only way that can be assessed is by people doing a business activity statement.

“We can’t do a business activity statement until March is finished. And March doesn’t finish until next week.”

The government and the ATO need a way to assess who is genuinely paying wages, otherwise, they risk those who don’t have any staff putting their hand up for the rebate anyway.

For some businesses — those that pay staff at the end of the month — March wages might not even be paid yet, she says,

“It’s hard for the government to figure out who is employing people until we lodge that BAS,” Price says.

“That’s not due to be paid until April,” she adds.

If the government was trying to assess eligibility, “it’s not a level playing field at the moment”, she explains.

“They need some kind of way, not to control it, but to ensure that people who are genuinely eligible are the ones that get that money.”

Remco Marcelis, startup accountant and founder of Standard Ledger, notes the scheme is about getting credit back for PAYG wages. For some businesses, that means a refund. For others, it just means the dollar figure they would have paid is lower, or zero.

But, even if it’s not a refund, businesses can start to consider the benefits now.

“If you can factor that into your forward planning, that is at least useful,” he says.

As it stands, the only cash he sees coming into the majority of businesses is via the Victorian government’s payroll tax rebates, which are being paid out automatically, and are expected to start being issued “in the next week or so”, Marcelis says.

At the same time, there is concern that some of the timings here are very vague. Applications for the apprentice wage subsidy are expected to open in early-April, for example. There’s no word on when that will be paid out.

The government has also said it will guarantee 50% of new loans issued, up to $250,000. This is intended to kick in from ‘mid-April’, but as of yet, the banks haven’t announced how this will work, or opened applications. But, usual lending criteria apply.

Still, Marcelis says “a bunch of our clients are targeting that”.

“I think there’s going to be a bit of a deluge there,” he adds.

“I would be getting all your things in order, ready to apply for that.”

Eligibility criteria

Of course, eligibility criteria, and questions about what support is available for which businesses, is a different issue in and of itself. The fact that not everyone is eligible for the rebate has been a significant point of contention for the small business community.

Specifically, sole traders, freelancers and self-employed people have been somewhat left out in the cold.

This is the “second piece of the puzzle”, Price says.

“When does everyone else get some benefit? That’s a really valid question right now.”

She does expect the package to change once again, this time offering more support to sole traders, and acknowledging them as business owners, rather than offering individual income-support payments.

It’s hard to know exactly when this might happen. But in this environment, things are changing fast.

The first two stimulus packages were announced just ten days from each other. In that time, the rebate for small businesses leapt from a maximum of $25,000 to $100,000.

Price and her team were just getting their heads around the first offering, and advising clients of the potential impact, she says.

“A week later, we had to change everything we advised.”

But for the time being, sole traders are not eligible for the same business benefits.

“If they don’t hire staff, they’re seen to be in a different category,” Price says.

So for the time being, what she would like to see for them is more pressure on landlords to be lenient on rent payments.

“There’s no assistance to cover the rent,” she notes.

“There’s the jobseeker allowance, but we all know that won’t be enough.”

However, ultimately, even with the stimulis package, all businesses are going to struggle. And Price doesn’t see things getting much better anytime soon.

“We need to remember that we’re all in this together. It’s not a competition of who gets more than somebody else. I think we’re all going to struggle across the board,” she says.

“We need to be in survival mode for the next three to six months because we just don’t know what’s going to happen.”

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