Startups and tech firms will not miss out on government’s $189 billion stimulus package to combat the growing economic crisis, with a range of targeted new initiatives on offer.
Prime Minister Scott Morrison unveiled the second stage economic stimulus package on Sunday. It focuses on helping small to medium businesses survive and to keep employees on board.
“We want to help businesses keep going as best they can and for as long as they can, or to pause instead of winding up their businesses. We want to ensure that when this crisis has passed Australians businesses can bounce back,” Mr Morrison said.
The stimulus package includes payments to companies to keep their employees, new loan guarantees, and Australian Taxation Office concessions.
Tech companies with a turnover less than $50 million will be eligible to receive a tax-free payment of between $20,000 and $100,000 this year. The payment, available from 28 April, will be equal to 100 per cent of a company’s salary and wages withheld.
The government expects the payments to benefit about 690,000 businesses, employing around 7.8 million people.
There will be additional payments available under the scheme from the end of July, with an estimated cost of $31.9 billion.
StartupAus treasurer and The Startup Shop founder Amit Shah said the package is targeted at companies that will be able to keep their employees on over the coming months, something that many startups will not be able to do.
“The people who are already planning to keep all their employees are in a much better position than half the businesses out there – they have the cash to do that,” Mr Shah told InnovationAus.
“Those businesses are going to get up to $100,000. That’s a really good announcement but it’s for a particular type of business. For early-stage companies with a few employees, they’re having to get rid of a lot of their staff and they’re not going to get access to this.”
For companies facing this prospect, the most relevant parts of the stimulus package relate to tax office relief, Mr Shah said.
There will be a temporary increase to the threshold at which creditors can issue a statutory demand on a company, and to the time companies have to respond. Relief will also be offered to directors from personal liability for trading while insolvent.
The ATO will also work with businesses during the crisis, with further measures potentially including a temporary reduction of payments or deferrals and the withholding of enforcement actions such as director penalty notices and wind-ups.
The government also unveiled a Coronavirus SME Guarantee Scheme, under which the government guarantees half of new loans issued to SMEs – capped at $250,000 – in an effort to provide more access to working capital.
The government will be providing a maximum of $20 billion for the loan guarantees.
The test will be in the details of this scheme and whether startups will be able to access it when they are facing a long stretch without revenue, Mr Shah said.
“All of those are great initiatives for people who have loans or the assets to get loans. But there are still some commercial tests and if you look at the projections for the next six months it is terrible for these businesses,” he said.
“They need loans to get through a period of no revenue, but that will automatically disqualify them from getting a loan in the first place.”
The Reserve Bank of Australia has also announced a $90 billion term funding facility for authorised deposit-taking institutions, with incentives for these companies to lend to SMEs
As part of the first stimulus package the government announced an expansion to the instant asset write-off program. Under the changes, the threshold will be increased from $30,000 to $150,000 for businesses with turnover of less than $500 million, up from $50 million.
This will initially be in effect until June 2020.
In terms of further efforts that could help startups during the crisis, Mr Shah said the tax concessions for investors in early-stage innovation companies could be broadened to assist companies needing to raise further funding and not wanting, or being unable, to take out a loan.
The government should also provide more certainty for companies making research and development tax incentive claims and consider speeding up the refund process, Mr Shah said.