Over the past few months, businesses across Australia have been faced with a challenge like no other. As they navigate their way through the economic fallout of the COVID-19 crisis, many are finding that accessing working capital is proving increasingly difficult. While bridging the gap between JobKeeper payments when revenue has all but dried up poses yet another hurdle.
Luckily, there’s some relief to be found in the form of the government’s Coronavirus SME Guarantee Scheme. Designed to help small businesses with timely access to capital so they can make it through the impacts of the pandemic, the scheme will support up to $40 billion of lending.
As a small business you’re likely looking for guidance on how to navigate the subtleties of your set up and determining eligibility. The team at Xero reached out to leading banks and lenders to discover their advice for helping small businesses with Coronavirus SME Guarantee Scheme applications. Read on to discover some of their top tips.
1. First, consider whether a loan is the best option for you and your business.
In this challenging time, it’s important not to over extend your business with debt and consider whether a loan of this type is the right solution for you.
2. Make sure you do your homework.
The role of your advisor/accountant is now more important than ever. Find out what inforamtoin is required of your and what steps you need to take to ensure you provide it to the bank.
3. Determine whether you need the loan for business purposes.
Speak to your advisor/accoutant so they can get an idea of what you’re looking to use the loan for (It’s important that this is for business purposes only). You’ll need to demonstrate how the loan will support your business’s current and upcoming working capital needs (i.e. cash your business needs to fund day to day operations and including expenses such as rent, wages and stock, etc)
4. Get your advisor/accountant to bring your financial information up to speed.
Ensure your financial statements for the 2019FY are finalised and look at having monthly management accounts prepared for as recently as possible as these will help with serviceability assessments the banks will have to do on your business’s pre-COVD-19 position.
5. Ensure your client has the details they need to be loan-ready.
To ensure the cash is paid into your account as quick as possible, ensure your accountant has everything ready for your application. Information required may include: personal ID, annual financial statements, and interim financial statements, bank statements, tax returns, BAS statements, and details of business expenses.
For any assistance with determining if a Coronavirus SME Scheme loan product is right for you, please contact us.