Federal Budget 2020 recap: Helping SMEs tackle the recession
Joe Papadatos, Managing Director
The Federal Government delivered its 2020 budget last month, and as was expected it was full of stimulus goodies for small and medium enterprises (SMEs).
The day after the budget was delivered there was plenty of media coverage about the different budgetary items, but most were quickly forgotten as the news cycle moved on. For this particular budget, it’s worth going back and reviewing the many benefits to SMEs.
The importance of healthy SMEs to a buoyant Australian economy cannot be overstated. SMEs make up 99 per cent of the economy and employ two in every three Australian workers. As SMEs grow, so does the economy, employment and access to new and diverse marketplaces. Even for those who don’t work for SMEs, their survival and continued growth are critical to the continued growth of our country.
This particular budget, aimed at shifting SMEs from tackling the pandemic to tackling the resultant recession, is unlike any other. We can’t just return to ‘normal’ and expect everything to be hunky-dory. COVID and subsequent containment measures have driven significant changes in the attitudes and behaviours of customers, employees and businesses, so adjustments are needed.
In Federal Budget 2020, Federal Treasurer Josh Frydenberg provided tax incentives, wage subsidies and mental health support for SMEs. It’s great to see this important sector receiving recognition for the key role it plays in our economy. It also provides recognition for just how many SMEs have been doing it tough as a result of the pandemic.
SME Guarantee Scheme
One aspect of Federal Budget 2020 is a refreshed and expanded SME Guarantee Scheme to help SMEs emerge from this very challenging period.
This extension of the government-guaranteed loan scheme increases the previous scheme of a 50 per cent guarantee against loans up to $250,000, to now offer the same guarantee against loans of up to $1 million, with unsecured or secured lending.
“In Federal Budget 2020, Federal Treasurer Josh Frydenberg provided tax incentives, wage subsidies and mental health support for SMEs.”
These loans are also now permitted to be used for a broader range of purposes, including business investment and growth, with loan terms of five years, an increase of two years from the Phase 1 scheme.
This is great news for a business like Icon Visual Marketing. As an SME, we can reap our own benefits, but it also provides additional scope for us to help our clients grow their businesses.
Moving from survival to growth
This initiative is an example of the Federal Government moving beyond merely helping SMEs survive the immediate impacts of the pandemic, and focusing on rehabilitating SMEs so they can succeed in the post-COVID world. We believe the expansion of the scheme will help bridge the gap between survival and growth.
At Icon, we work with SMEs to help them grow their businesses and solve business problems by building customer connections through innovative marketing programs. We are also business advisors who understand the challenges SMEs face every day. We consult with SMEs and help them to develop and implement strategies for sustained growth.
* This is part one of a five-part series digging into Federal Budget 2020 and outlining what it holds for SMEs. Read part two now.
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