The Australian Government has responded to the negative economic impacts of COVID-19 for SMEs in a number of ways, including the Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme. The Scheme is supporting up to $40 billion of lending to SMEs (including sole traders and not-for-profits) by guaranteeing 50 per cent of new loans issued by participating lenders to SMEs.

The Scheme enhances lenders’ ability to provide credit, allowing many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus, to recover and to invest for the future.

Phase 1 of the Scheme, which commenced on 23 March 2020 and closed for new loans on 30 September 2020, provided SMEs with access to unsecured working capital loans to help them manage disrupted cash flows and get through the impact of the Coronavirus.

The extension of the scheme, Phase 2, commenced on 1 October 2020 and will be available for loans made by participating lenders until 30 June 2021. It includes targeted amendments to the Scheme’s parameters to meet the evolving needs of SMEs, and continues to support lenders’ ability to provide credit and ensure that SMEs benefit through low interest rates.

SMEs, including sole traders and not-for-profits, with a turnover of up to $50 million are able to apply for loans under the Scheme. The details on the Scheme can be found here: https://treasury.gov.au/coronavirus/sme-guarantee-scheme

Under a measure unveiled in the recent federal budget, a temporary tax incentive will be available to businesses with up to $5 billion in annual turnover, allowing an immediate write-off the full value of new eligible, depreciable assets of any value that are first used or installed before June 30, 2022.

Businesses will also be able to claim full deductions for the cost of improvements made to existing depreciable assets. SMEs with up to $50 million in annual revenue will be able to apply “full expensing” to all second-hand assets.

The government has also added another six months to the existing instant asset write-off scheme to allow businesses that already hold eligible assets to first use or install those assets. This extension will end on June 30, 2021.

The Instant Asset Write-Off (IAWO) threshold had been previously increased from $30,000 to $150,000 and expanded access to include businesses with aggregated annual turnover of less than $500 million (up from $50 million).

The higher threshold provides cash flow benefits for businesses that will be able to immediately deduct purchases of eligible assets each costing less than $150,000. The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets. Details of the threshold can be found here: https://business.gov.au/Risk-management/Emergency-management/Coronavirus-information-and-support-for-business/Increasing-the-Instant-Asset-Write-Off

We would be pleased to assist with providing you with any support, assistance or advice relating to loan applications or asset write-offs. If you need help, please contact:

Paul Congdon – Mobile 0420 757 727 or paul@rbgprivate.com
James Nahlous – Mobile 0438 213 690 or james@rbgprivate.com
Scott Davis – Mobile 0418 482 619 or scott@rbgprivate.com

Kind regards

Carl Ireland
CEO | RBG