Ever heard of a neo business credit card? Say hello to Melbourne-based fintech Archa. This week, Archa announced that it has become a principal issuing member of Mastercard, meaning it can access the card providers leading global payment network. The partnership will allow the fintech to launch its new neo business credit card along with an app with innovative tools to help businesses manage their expenses. “This is a really important strategic milestone for Archa. We’re thrilled to have the support of Mastercard as a critical foundation to our business model,” Archa’s chief executive, Oliver Kidd said. “We look forward to working closely with Mastercard over the coming years to support small businesses throughout the region.”
As lenders gear up for phase two of the government’s SME Loan Guarantee Scheme, new Commonwealth Bank figures have emerged showing NSW and Victorian businesses have snagged the biggest piece of the scheme’s funding pie to date. NSW and Victoria made up almost two-thirds of CommBank’s government-backed loans (38% and 26% respectively), while Queensland came in third place at 16%. “Obviously different lockdown measures have impacted some businesses more than others and many of our customers, particularly those in the greater Melbourne and greater Sydney area, worked with our bankers to quickly ensure they had extra cash flow in case they needed it,” CommBank’s group executive for business banking, Mike Vacy Lyle said. Under the first phase of the scheme, the government guaranteed half of all unsecured three-year business loans of up to $250,000 issued by participating lenders including CommBank, ANZ and 39 other smaller providers. Under phase two, the loan terms have been extended to five years, and loan amounts increased to $1 million. Almost 20,000 small to medium sized businesses (SMEs) took advantage of phase one, with CommBank approving loans for 9,400 of these firms. According to CommBank, nearly one-fifth of those businesses belonged to the property and business services sector (17%), while 16% came from retail, 14% from construction, and 14% from accommodation, cafes and restaurants - all industries that experienced high levels of disruption due to COVID-19.
For small businesses across Australia this may have been one of the most important federal budgets yet. On top of extended coronavirus stimulus packages like JobKeeper, the 2020-21 Budget was a ray of hope that more financial relief would be rolled out to help companies and the economy recover from the current recession. So what exactly is the federal government pledging to deliver to support small to medium-sized enterprises (SMEs) through this period? From tax offsets to a new wage subsidy program, there’s lots in the pipeline to watch for. In fact, businesses are set to receive $31.6 billion in tax breaks - almost twice as much as households. But unlike households, the business tax incentives are only temporary, with an aim of encouraging more investment in jobs and ‘big ticket’ items (like new equipment and machinery) over the next few years. Read on for a snapshot of budget support measures for your small business:
As 2020 continues to be a financially tough year for small businesses, searching for ways to improve cashflow has become nothing short of essential. While business loans are a popular option, there may be a better solution for you if your struggle is with slow-paying debtors: invoice finance.
As job losses and pay cuts become the new norm for Australians, the question of how to earn a sustainable income has never been more pertinent. But what are your options beyond relying on government stimulus or payday loans which charge exorbitantly high fees? Global microfinance group Grameen has stepped in to offer low-income Aussies another way forward: setting up your own small business. Microfinance refers to small amounts of working capital that are provided to borrowers, typically excluded by mainstream lenders. These loans are backed by social collateral, which means each group of borrowers is collectively responsible for making sure their members meet their repayments.Grameen Australia’s chief executive officer, Adam Mooney says Grameen has a legacy of helping countries and communities out of crisis and its expansion to Australia in the coming months will aim to do just that. “We’re seeing Jobkeeper and Jobseeker being tapered off, so we want to be there at the right time in the right place to be able to provide the incentives to work but also the opportunity to work for many millions of people,” he says. While Grameen began in Bangladesh in the 1970s, its success in reaching 130,000 women in the US over the past decade has proven that its microfinance model can also be applied to “so-called developed countries”. The idea behind Grameen’s model is that it acts as a springboard for entrepreneurs to build up their business and become self-sustaining.“We want to be an enabling financial actor rather than a permanent fixture,” Mooney says.“The ideal scenario for each business is that it generates sufficient return, that it can grow itself and doesn’t need to continually come back for additional loans.”Mooney says the model especially complements Australia’s migrant and Aboriginal and Torres Strait Islander communities who “have got great skills and an aspiration but haven’t had that sort of investment capability to be able to start their own businesses.” For example, Grameen’s group formation structure lends itself well to the principles of collective wealth and collective identity that are culturally familiar to Indigenous people.
As small businesses grapple with the uncertainty of operating amid COVID-19, new research shows cashflow remains the biggest barrier to recovery. For 1 in 3 small business owners, cashflow sits top of mind as their primary worry, according to figures released by business lender Finstro this week.This is based on surveys with 1,200 Aussie small businesses in July, just before Victoria’s second pandemic wave worsened. Finstro’s chief product officer, Tom Whitworth said these concerns around cashflow reflect the “payments crunch” that many small to medium-sized enterprises (SMEs) face right now. That is, there’s a real struggle to balance slow-paying customers with suppliers requesting faster payment times. “Suppliers, who are rightly concerned about securing payments in this challenging environment are increasingly demanding shorter trade terms and often cash on delivery,” Whitworth said. “This makes it difficult for small businesses who are looking to order supplies and reinvigorate their businesses after a period of significantly reduced trade or shutdown.”
In the business world, not everyone has the luxury to wait for extra finance. Luckily if you need that cashflow boost ASAP, whether to purchase stock or pay your suppliers, Commonwealth Bank may have a solution. This week, the big bank launched a new online platform that promises to give its customers access to business loans in near real time. With BizExpress Online, eligible CommBank small business customers can apply for loans of up to $50,000, via their Netbank or the CommBank app. Once an automated lending decision has been made, funds will arrive in their account in as little as 20 minutes. According to CommBank’s business banking group executive, Mike Vacy-Lyle, BizExpress Online builds on an earlier product that was introduced to speed up the lending process.“When we launched ‘BizExpress’, the aim was to provide a simpler and faster lending experience for our small business customers, with same day decisions and funding within a week,” he said. “Our latest investment in the new digital version makes it even easier and quicker for our customers to get the financial support they need.”Right now, BizExpress Online is only available with business lending under the government’s SME Loan Guarantee Scheme. Under the first phase of this scheme, 50% of all new three-year unsecured business loans of up to $250,000 issued by participating lenders until 30 September 2020 will be guaranteed.“Small businesses need quick access to cash flow to keep them going through these tougher times - and BizExpress Online aims to provide them with this,” Vacy-Lyle said. This funding also comes with waived fees over the life of the loan and deferred repayments for the first six months.CommBank expects BizExpress Online will be expanded to other non-scheme loans and products in the coming months.
As Victoria enters its second lockdown and new community transmission cases are recorded daily in NSW, the battle against COVID-19 is far from over. That’s why for small businesses across Australia still fighting for survival, getting their hands on the right financial support and guidance has never been more essential. So if you’re pondering where to look for information and assistance, we’ve made your search a little easier. Below we’ve compiled a list of Aussie-based initiatives and resources that have popped up to help your business get back on its feet.
2020 has been a tough year for many Aussie businesses. Three months since COVID-19 was first declared a pandemic, 47% were still reporting falls in revenue, according to Australian Bureau of Statistics (ABS) data released last month. But as parts of Australia begin to reopen and navigate a COVID-safe environment, the next big question is this: how can small businesses ensure cashflow issues don’t stop them from bouncing back with full force? For some, the answer may be the government’s Coronavirus SME Loan Guarantee Scheme. Under the first phase of this scheme, set to end 30 September 2020, the government is guaranteeing half of all three-year unsecured business loans of up to $250,000 issued by participating lenders. Under the second phase, running between 1 October 2020 and 30 June 2021, small to medium-sized enterprises (SMEs) can access even larger loans of up to $1 million and repay them over a longer period of five years. Prospa is one of the scheme’s 41 participants, alongside other non-bank lenders including GetCapital, OnDeck Capital and Spotcap. And it’s catering for the scheme and the tough climate businesses face right now with two new products: the Back to Business loan and the Back to Business Line of Credit. (Note: from 30 September onwards, these products are no longer be available.)With both products, approved businesses can receive funds of up to $250,000 in as short as 24 hours, and they also won’t need to worry about making any loan repayments for six months. Prospa’s co-founder and chief revenue officer, Beau Bertoli says the focus of Back to Business is to help small businesses not just survive, but thrive for the rest of 2020. “Of course there are a lot of viable businesses across the country who were hit hard by restrictions and now need cash flow support, but many are now starting to get back to business and plan for the future,” he says. “Our funding has helped these small businesses make upgrades to meet new sanitation requirements, revamp their websites and introduce online services, and even launch digital marketing campaigns.”“There are also businesses in essential services or particular sectors experiencing demand who want to seize growth opportunities while they can,” he adds. “For example, with more Australians gardening and renovating, we’ve had fertiliser and tiling businesses with months of work lined up come to us for funds for extra stock and supplies.”
While Aussie businesses are making small strides towards recovery, new data reveals many continue to struggle with overdue debt. Figures from digital credit agency CreditorWatch released this week show that fewer businesses defaulted on credit last month - July’s default figure was 13% lower than in June. July also saw companies take a shorter time to repay any money owed, with an average 8% decline in payment times recorded across the board. But CreditorWatch’s chief executive officer, Patrick Coghlan said these signs of improvement are modest at best. For one, payment times were still a staggering 224% higher last month than in July 2019.