Relief package ‘will take a lot of stress off small businesses’
Association says immediate strain will lift but time will tell if more needed
Thousands of small business will receive a much-needed boost after the Government announced it would provide struggling employers with $8.7 billion in support.
The bulk of funding is expected to go to wage subsidies for businesses that can show a 30 per cent decline in revenue for any month between January and June 2020.
Eligible employers will receive $585.80 a week for fulltime employees and $350 per week for part-timers.
The package also includes sick leave cover and tax changes to free up cashflow.
Restaurant Association chief executive Marisa Bidois said the financial support would come as a relief for many small businesses.
“There is still more work to be done but this is a really solid start,” Bidois told the Herald.
“It will certainly take a lot of stress off of businesses.”
Bidois said the threshold to access the help — a 30 per cent drop in revenue compared to this time last year — was fair.
An individual business can access up to $150,000 in support, Bidois said this was “a good start” for many: “As time goes on we may need to review that. If we’re looking long term, some people are saying it may be 12 months, some are saying 18 months, then the chances are we are going to revisit things.”
Last week Bidois told the Herald hundreds of hospitality businesses were on the brink of collapse following the outbreak as diner numbers dropped off drastically. She said the support, which could be accessed from five days’ time, would ease immediate strain.
“For businesses that have their backs against a brick wall right now, it is a welcome relief.”
Small business accounting software firm MYOB said how the package was streamlined would be vital to its success and therefore small businesses’ survival during challenging months ahead.
“Rapid, targeted delivery of this package is key,” MYOB New Zealand country manager Ingrid CroninKnight said. “This investment must be put into the hands of small businesses as quickly as possible, to help them pay staff and suppliers, and maintain cashflow”.
Cronin-Knight urged small businesses to communicate their situations to their banks and financial advisers about how they could restructure debt and even out cashflow bumps.
They should also be looking at how they can reduce costs within the business, she said.
Business Mentors chief executive Craig Garner called the support “a generous package”.
Garner too said how the support was managed would be key to how well it helps struggling businesses.
“At the very least, what this has given businesses is some hope that they are not going to starve.”
Garner said firms needed to be open about cashflow issues, and banks and Inland Revenue would respond appropriately. IRD has extended its halted penalty payments.
The Canterbury Employers Chamber of Commerce
There is still more work to be done but this is a really solid start.
Marisa Bidois, Restaurant Association chief executive
It’s about keeping the economy going and businesses intact.
Brett O’Riley, Employers and Manufacturers Association chief executive
also welcome the rescue package, saying the financial support would boost confidence for employers and employees.
Canterbury Employers’ Chamber of Commerce chief executive Leeann Watson said the package would soften the blow for businesses already affected by the Covid-19 outbreak.
“We are particularly pleased to see applications for the wage subsidies are available from today, with payments from five days’ time, particularly to those who have already faced significant impacts and more so following further travel restrictions,” Watson said. The Employers and Manufacturers Association said the aid package would boost business confidence and “cohesion” in the short term.
Chief executive Brett O’Riley said the $5.1 billion in wage subsidies and the leave payment scheme for workers would be the most valuable pickings from the aid. “It’s about keeping the economy going and businesses intact.”