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 business wins
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. It is great to see an initiative that 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 cashflow.
- $250m regional infrastructure spending. Investment in infrastructure is vital ($15.2 billion in new funding over 10 years for infrastructure projects nationally), 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 really accelerate investment in infrastructure – not just in the capital cities but also in regional Australia to allow communities to thrive and decentralisation to continue.
- Shielding SMEs from debt recovery action, plus further 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. Now businesses must play their part – to fully recover from the pandemic and take advantage of market opportunities, especially if your business has creditor debt, business owners need to think about how 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 able to be written off against a 2018-2019 profit, a boost for solid businesses who took a hit during the pandemic year.
What else the SME sector needs
- 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’d encourage the National Cabinet to make this a priority for discussion, 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. To do this, SMEs need to start investing in their own growth, which many put on hold during 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 promising signs, the research shows that small business owners are still 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 will remain difficult for the Australian 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 largest non-bank business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion revenues. For more than 30 years ScotPac has helped thousands of business owners succeed, by unlocking the value from their business assets. Whether it is purchasing stock, investing in vehicles and equipment, improving cash flow or accessing additional working capital, ScotPac can help.
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