October 2020 Business Finance Update
Here are three top stories you and your business will find interesting:
SMEs get new funding option
Banks approving 70% of biz loans
Businesses facing Nov 16 tax deadline
Read more below.
SMEs given new way to tap into patient equity
The federal government has formally launched the Australian Business Growth Fund, which will help SMEs find passive, long-term investment partners.
Eligible businesses can apply for a long-term equity capital investment of between $5 million and $15 million.
In return, they will have to give up a minority stake in their business – typically 10-40% of total, fully-diluted, share capital (on an ‘as-converted’ basis).
To be eligible, businesses must:
have annual revenue of between $2 million and $100 million
be able to demonstrate three years of revenue growth and profitability (allowing for the impact of COVID-19 on recent business performance)
The fund has been seeded with $540 million of capital:
$100 million from the federal government
$400 million from the big four banks
$40 million from Macquarie Bank and HSBC
The fund will operate commercially and make investment decisions independently of the government.
Australia’s banks remain open for business
The flow of credit to businesses remains strong, despite the coronavirus crisis, according to the Australian Banking Association.
The ABA has reported that, between February 1 and October 7:
128,000 businesses received loans
70% of applications were approved
$320,000 was the average loan size
$200 billion was loaned to businesses of all sizes
$41 billion was loaned to SMEs
“The clear message from this new data is that Australia’s banks remain open for business for small business customers,” said ABA chief executive Anna Bligh.
“Australian banks are continuing to provide a lifeline to small and medium businesses across the country. The rate of lending has held up strongly despite the pandemic.”
Businesses facing November 16 tax deadline
Employers have little time left to update their payroll processes in response to the federal government’s recent personal tax cuts, which were backdated to 1 July 2020.
By November 16, employers must ensure they are withholding the correct amount from salary or wages paid to employees.
The government also made changes to age limits for genuine redundancy and early retirement scheme payments – this may impact withholding calculations for some employees
Click here for the list of updated tax tables. Click here for the list of ongoing tax tables.
The government announced the tax cuts in its October budget. Under the changes:
the low income tax offset increased from $445 to $700
the top threshold of the 19% tax bracket increased from $37,000 to $45,000
the top threshold of the 32.5% tax bracket increased from $90,000 to $120,000
Got any questions about what you just read? I'm happy to help. Get in touch any time.
Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.
