Businesses struggling due to Covid-19 will be able to access up to $150,000 in financial assistance. Photo / 123RF
Businesses struggling due to Covid-19 will be able to access up to $150,000 in financial assistance. Photo / 123RF
Thousands of small business have been given a much-needed boost after the Government announced it would provide struggling employers with $8.7 billion in support.
The hospitality and small business sectors have welcomed the financial assistance package which will see $585 per full-time employee and $350 per part time employee givento employers who have experienced a 30 per cent drop in turnover compared to this time last year following disruption from the global Covid-19 outbreak.
Government this afternoon announced a $12.1b rescue package, this included a $500 million injection for additional health resources, $2.8b in income support, the establishment of Covid-19 sick leave to cover, and tax changes to free up cashflow.
Restaurant Association chief executive Marisa Bidois said the industry would be happy with the announced package - the employer wage subsidies were higher than the $500 per full-time employee and $250 per part-time employee the association had initially lobbied for.
Bidois said the threshold to access the help - a 30 per cent drop in revenue compared to this time last year - was fair.
An individual business can access up to $150,000 in support, Bidois said this was "a good start" for many: "As time goes on we may need to review that. If we're looking long term, some people are saying it may be 12 months, some are saying 18 months, then the chances are we are going to revisit things."
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Bidois said thousands of businesses within the hospitality sector would likely access the financial support.
She was unsure of how long $150,000 could sustain a single business.
Last week Bidois told the Herald hundreds of hospitality businesses were on the brink of collapse following the outbreak as diners' numbers dropped off drastically. She said the support, which could be accessed from five days' time, would ease immediate strain.
"For businesses that have their backs against a brick wall right now, it is a welcome relief."
The total $12.1b allocated funding equates to 4 per cent of New Zealand's GDP.
Small business accounting software firm MYOB said how the package was streamlined would be vital to its success and therefore small businesses survival during the challenged months ahead.
MYOB New Zealand country manager Ingrid Cronin-Knight said many businesses would welcome the financial aid, and the speed the Government had been able to respond to the crisis.
"Rapid, targeted delivery of this package is key," Cronin-Knight said. "This investment must be put into the hands of small businesses as quickly as possible, to help them pay staff and suppliers, and maintain cashflow.
"Our experience over two decades of working with local businesses tells us that cashflow is going to be the biggest issue in ensuring the survival of SMEs. It's vital we get this process right so we can ensure businesses are getting the urgent help they need now."
Cronin-Knight urged small businesses to communicate their situations to their banks and financial advisers about how they could restructure debt and even out cashflow bumps.
They should also be looking at how they can reduce costs within the business, she said.
Business Mentors chief executive Craig Garner called the support "a generous package".
Garner too said how the support was managed would be crucial to how well it helps struggling businesses.
"At the very least, what this has given businesses is some hope that they are not going to starve."
Covid-19 was affecting businesses of all industries, not just the hospitality, tourism and retail sectors, Garner said.
"My recommendation to anyone in business right now is start testing your systems to get ready for remote working, if you can. If you can't, start exploring your options."
Garner said it was important to be open about cashflow issues, and banks and Inland Revenue would respond appropriately. IRD has extended its halted penalty payments.
"It's in everybody's interests that businesses survive, especially at this time."
Marisa Bidois, chief executive of the Restaurant Association. Photo / NZME
The Canterbury Employers Chamber of Commerce also welcome the rescue package - it said the financial support would boost confidence for both employers and employees.
Canterbury Employers' Chamber of Commerce chief executive Leeann Watson said the package would lower the blow for businesses already affected by the Covid-19 outbreak.
"We are particularly pleased to see applications for the wage subsidies are available from today, with payments from five days' time, particularly to those who have already faced significant impacts and more so following further travel restrictions," Watson said.
The Employers and Manufacturers Association said the financial package would help to boost business confidence and "cohesion" in the short term.
Chief executive Brett O'Riley said the $5.1 billion in wage subsidies and the leave payment scheme for workers would be the most valuable pickings from the aid.
He said the subsidies would enable businesses to hold on to their staff.
"We know many of our members are operating on small margins and facing some hard calls around downsizing, and this will help delay those decisions until the situation becomes clearer," O'Riley said.
"Our AdviceLine has been running red hot over the last few weeks and the biggest issue has been around leave. Employers certainly want to look after their people but it comes at a huge cost.
"It's about keeping the economy going and businesses intact and what we've seen first hand is them collaborating to maximise the chances of everyone getting through this recession."
Business Central said the support for struggling businesses would keep businesses afloat and people in vulnerable sectors in work.
