Australia’s largest non-bank small business lender has welcomed Federal Budget 2021 initiatives that “give SMEs a great chance to continue to rebound from the pandemic”.
ScotPac CEO Jon Sutton said this is a budget which should create an environment that helps SMEs continue to rebound.
“There are positive initiatives to support the small business sector, and the focus on boosting consumer confidence should also help businesses,” Mr Sutton said.
“This is a small business-friendly budget that should give SMEs the confidence to invest in their own growth, as the economic recovery gathers momentum.”
“What this means is it’s time for SMEs to really think about their business plans, about restructuring and about how they’ll fund their continued recovery.”
Small businesses encouraged to win.
Mr Sutton said Budget 2021 initiatives that the small business sector will appreciate include:
The extended instant asset write-off is good for businesses.
It allows them to buy the vital equipment needed to continue growing. We’ve seen with our own clients around Australia the positive impact this can have.
While it has been extended until June 2023, it should be made a permanent fixture.
$225m craft brewer excise relief.
The initiative allows Australia’s burgeoning craft brewing industry to thrive. ScotPac supports a number of craft brewers so we know the massive impact excise duty has on their cash flow.
$250m regional infrastructure spending.
Investment in infrastructure is vital ($15.2bn over 10 years for infrastructure projects), and while there was a regional boost in spending it would be good to see more.
Interest rates are so low that now is the time for the government to accelerate investment in infrastructure in Australia to allow communities to thrive and decentralisation to continue.
Shielding SMEs from debt recovery and action on insolvency reforms.
It is a positive move to allow the Administrative Appeals Tribunal to pause or modify ATO debt recovery actions against taxes owed by small businesses.
Businesses must fully recover from the pandemic and take advantage of market opportunities. If the business has creditor debt, owners need to think about their future structure.
ScotPac has been at the forefront of allowing businesses to restructure and invest in growth for decades, but in particular during the past six months during recovery from the recession.
Extension for another year of the loss carry-back provisions for SMEs
With 2022-23 losses being able to be written off against a 2018-2019 profit, this will be a boost for solid businesses who took a hit during the pandemic year.
What else does the SME sector need?
The move to encourage the states to streamline payroll tax will be welcomed by small businesses, as it’s a handbrake on hiring.
Mr Sutton said, “I’d say go further and abolish it. We encourage Cabinet to make this a priority, as this would be an initiative in support of business growth and economic prosperity”.
The Budget has laid the groundwork, now small businesses can play an important role in guiding Australia out of the pandemic-induced economic downturn.
SMEs need to start investing in their own growth, which was put on hold due to the pandemic.
There are some early positive signs of recovery. ScotPac’s SME Growth Index recorded an eight-point increase in the number of businesses expecting positive growth in the first half of 2021.
Despite these signs, the research shows that SMB owners are hesitant to invest in their own growth and are “fence-sitting” waiting to see what the Government and the economy does.
“It is crucial that business owners have the confidence to grow. Until they are comfortable to invest in their own growth, it remains difficult for the economy to take off,” Mr Sutton said.
“I’m hopeful that this small business-friendly 2021 Federal Budget will give business owners the confidence to act and provide the impetus for a small business-led national recovery.”
ScotPac is Australia and New Zealand’s non-bank business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion revenues.