Money moves to help your business survive coronavirus

By Katherine O'Chee ·

It’s no secret times are tough for many small business owners. By now, coronavirus shutdowns would have likely affected your operations one way or another, whether your daily customer count has dwindled or you’ve had to close up shop completely. 

In fact, only recently, CommBank revealed Aussie business activity has experienced an even steeper landslide in April than in the month before. Experts don’t see promising things on the horizon either as Australia heads towards a potential recession

National broker channel manager of OnDeck Australia, Robbie Fidler says over 80% of SMEs have been impacted by COVID-19.

“The present market is creating challenging conditions around managing working capital and supporting a healthy cash flow - and this is where business finance can help,” he says.

Indeed, not all hope is lost for smaller enterprises. By making the right money moves now, you can minimise the damage done and give your business the best shot at post-coronavirus recovery. 

1. Seek out external support 

If you haven’t already, the first step is to check what coronavirus assistance options from the government and your bank are available, and which ones apply to your situation. For the details, read our guide to financial relief for small businesses, or here’s a quick rundown … 

To date, several lenders have made announcements about how they’re assisting business banking customers affected by COVID-19. Common measures have included interest rate cuts across business loans, deferred loan and credit card repayments, and waived fees for early term deposit withdrawals. 

But even if you haven’t heard any official updates from your bank, they should have a financial hardship policy in place, so it’s worth reaching out regardless. 

“Many SME owners don’t realise that businesses, just like people, have a credit score. By acting quickly to negotiate a repayment plan with their lender, SMEs can minimise any damage to their credit score,” says Fidler.  

The federal government has also launched a number of initiatives to help businesses get back on their feet, such as instant asset write-offs and stimulus payments to boost cash flow. Plus, all the states are offering their own support packages, which include payroll tax waivers.

Hot tip: When taking advantage of deferred loan repayments, look out for the term ‘interest capitalisation’. This essentially means that for the period your repayments are frozen, interest will continue to be charged on top of your outstanding balance, so you’ll wind up paying more over the life of your loan. 

2. Protect your staff

Over a million Australians are expected to be out of a job in the months ahead. 

As a business owner, you’ve no doubt had to make some tough calls. But ideally, you would reach a balance between conserving enough cash to survive and providing your team with something better than a layoff. 

By retaining as many workers as possible, you’re not only inspiring their loyalty, but also making it easier for your business to bounce back. Having existing employees means you won’t need to rebuild your operations from scratch post-coronavirus. 

The strategy for staff retention will look different for each business. Perhaps it’s cutting back on work hours and paying your team a little less for the time being. 

Or perhaps it’s signing up for the government’s JobKeeper scheme, which will give eligible businesses up to $1,500 per employee to help keep staff on the payroll. 

Interested in applying? You still have time to enrol your business in the scheme, as the deadline has been extended to 31 May. For more information, head over to the Australian Taxation Office (ATO) website

3. Prioritise connection over sales 

Even while your doors remain shut and your sales take a nosedive, it’s important not to overlook your relationship with customers and clients. Maintaining clear channels of communication - over phone, email or social media - sends the message that your brand cares about its stakeholders. 

Show kindness by responding to your customer’s current needs. Depending on the business, this could be as simple as posting content that provides guidance on how to get through this difficult period. Or it might involve extending your service hours. Some fitness apps like Chris Hemsworth’s Centr have even released premium features for free to encourage people to stay fit and healthy while self-isolating. 

4. Get creative with a business loan

Small business owners are also finding new ways to offer their products and services amid COVID-19. 

Some gyms and yoga studios have moved their classes online, while cafes are now delivering pastries and coffees straight to people’s front doors. Stagekings, which specialised in creating stages for outdoor events, has adapted by shifting its operations to manufacturing work-from-home tables. Meanwhile, event planning organisation OzParty has launched virtual team-building exercises to help remote workers stay connected.

“One OnDeck client - a bakery - used business finance to employ a full time doorperson to ensure that social distancing is maintained among customers,” Fidler adds. 

Similarly for your own business, thinking outside the box is a great way to tackle the challenges presented by coronavirus. 

RELATED: 4 ways to turn your side hustle into a full time business

To grab hold of those innovation opportunities, why not consider taking out a business loan? This would give you the additional capital you may need to upgrade your website or buy new equipment. 

Fidler recommends looking for a loan that offers fast-tracked application and approval, as longer wait times can slow down business activity and cause delays in buying stock or hiring new staff members. 

“OnDeck research shows that among SMEs that have successfully applied for bank finance in the past, over one in four (27%) have been negatively impacted by the time taken to secure finance,” he says. 

The good news is, securing extra finance may become even easier under the SME Loan Guarantee Scheme

As part of this scheme, the federal government will guarantee half of all new three-year unsecured business loans of up to $250,000 from participating banks and non-bank lenders until September 30. Just bear in mind loan approval will depend on whether you’re able to meet the lender’s eligibility criteria. 

RELATED: Non-bank business lenders join SME Loan Guarantee Scheme

Right now, you can snag a killer deal, thanks to the host of business loan rate reductions after the Reserve Bank’s emergency cut to the official cash rate. As of May 1, the average rate for small business loans (variable, residentially secured) offered by banks in the Mozo database is 4.20%, compared to 4.65% on April 1. That’s a 45 basis point difference! 

Page last updated October 24, 2020

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Hot tip: Double check to see if your business loan is secured or unsecured - in other words, does it need to be backed by an asset (e.g. your home equity)? If so, then should you default on the loan, your asset can be used to repay the lender. 

5. Plan ahead with an emergency fund

As a small business owner trying to weather the effects of unexpected expenses, chances are your personal finances have also taken a beating. 

That’s when an emergency savings fund can help. This is a money bundle designed to support you through a crisis, and it should cover at least 90 days worth of essential household expenses. 

Build your buffer by stashing it inside a high interest savings account with no ongoing fees. Despite the state of savings accounts right now, two providers in the Mozo database still offer competitive at-call rates of 2.00% while introductory rates go as high as 2.65%. 

Hot tip: Introductory rates only last for a limited period of time after you sign up, so you’ll need to be proactive with switching between different saving accounts in order to keep earning high interest on your emergency fund.

Head over to our high interest savings account comparison table to weigh up your options today. 

Or check out our business banking hub for all the latest news and updates for small businesses.

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Katherine O'Chee
Katherine O'Chee
Money writer

Katherine O’Chee is Mozo’s international money transfer and forex expert and business banking writer. She keeps Mozo’s readers on top of the latest news and writes in-depth features to inform and help Australians make smarter financial decisions. Her work has been published in major media outlets including Sydney Morning Herald, SBS News and Bangkok Post. She has a Bachelor of Arts (Media and Communications) from the University of Sydney.