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Small businesses all around the world are facing uncertain times. However, rather than shutting up shop until COVID-19 passes, the federal government is hoping to stimulate SME spending through a raft of initiatives and tax incentives.
Indeed, the government estimates its two new business investment initiatives have the capacity to support more than 99% of businesses across Australia (3.5 million SMEs).
Basically, it’s hoping these measures will encourage SME owners to “stick with investments they had planned, and encourage them to bring investment forward to support economic growth over the short term”.
Let’s take a look at what they involve.
The instant asset write-off threshold has been increased from $30,000 to $150,000 (ex GST) and can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million) until June 30 2020.
Assets that may be able to be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business, for example.
Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.
Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.
This can help with your business’s cash flow, as getting this cash back sooner means you can re-inject it straight back into other parts of your business.
The other big initiative in the federal government’s plan to support SMEs is accelerated depreciation.
Basically, businesses will be able to immediately deduct 50% of the asset cost in the year of purchase and then also depreciate the remaining 50% over the asset’s useful life, so long as the business has a turnover of less than $500 million.
This initiative will provide businesses with a 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.
Sound a little confusing? The good news is that the Business.gov.au website has two great case studies that explain exactly how this initiative works in more detail.
If you’d like to find out more about the instant asset write-off or the accelerated depreciation deduction, and how they might work with an asset purchase for your business, get in touch today. We’d love to help out any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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First home buyers are throwing themselves into the property market in numbers not seen since 2009.
The number of owner-occupier first home buyer loan commitments reached its highest point in ten years in January, with newcomers taking out 9,945 loans (seasonally adjusted), according to ABS data.
That’s a 3.2% rise on the previous month and a 20% increase on January 2019 (7921 loans).
A recent upwards trend in the home loan market was also reported in figures released by The Australian Prudential Regulation Authority (APRA).
The APRA data showed a 12.4% increase in the value of new housing loans settled by authorised deposit-taking institutions (aka lenders) in the December 2019 quarter.
Two things, mainly.
The first is the federal government’s First Home Loan Deposit Scheme.
The scheme, which started on January 1, can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).
As of late February, it was reported that the majority of the 5,000 places available through 25 non-major lenders for this current financial year were still available to be reserved by potential first home buyers. So if you’d like to find out more get in touch!
The other main contributing factor to the growth spurt in first home buyer numbers is low rates.
Earlier this month the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to a new record low of 0.50%.
This came after three cash rate cuts in 2019, with the latest as recent as October.
And interestingly, RBA Governor Philip Lowe has hinted more rate cuts could be on the way in coming months, saying the RBA will continue to closely assess the implications of the coronavirus
For those thinking of entering the property market for the first time there’s a lot of recent changes to consider – including the record-low RBA cash rate and the federal government’s First Home Loan Deposit Scheme.
So if you’re thinking about purchasing your first home soon, get in touch today, we’d love to help you through the process.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
SME owners concerned about the coronavirus outbreak impacting their cash flow are being urged to talk to their creditors as soon as possible.
Earlier this month the RBA cut the official cash rate by 25 basis points to a new record low of 0.50% due to the impact of the coronavirus outbreak on global financial markets.
And as the economic ripple effects of the coronavirus start to hit Australian businesses, financial and consumer law firm MyCRA Lawyers says the repercussions of not meeting loan repayments in a timely fashion could impact businesses for five years.
“The risk of an extended and prolonged economic downturn is real and affecting the entire economy,” says MyCRA Lawyer’s CEO Graham Doessel.
“The problem is even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.”
Mr Doessel says as soon as you are 14 days or more late in making a loan repayment it can go on your comprehensive credit file for two years.
“This will impact your ability to access credit,” Mr Doessel says.
“[If you] get a default or a court judgement on your file you will be feeling the financial symptoms of coronavirus for five years.”
Mr Doessel says if your business is struggling to meet its bills you should contact your creditors straight away and apply for hardship.
“Most lenders have a positive obligation to offer hardship in genuine cases. If you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room,” Mr Doessel says.
“Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.”
Mr Doessel adds that lenders and companies like Telstra, Optus, AGL and Origin Energy have hardship policies for genuine victims of circumstances beyond their control.
“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider – in writing if possible – to let them know the circumstances and to check no bills have gone unpaid,” he said.
“Most companies have the discretion to forgive a debt in extreme cases.”
The coronavirus outbreak comes as many Australian businesses are still reeling from bushfires.
Indeed, a NAB survey has found that two-thirds of Australian SMEs have been directly or indirectly impacted by the recent bushfires, with business disruption, higher insurance, and lower customer confidence cited as key factors.
“We know that many families and businesses face an uncertain future and we recognise the significant impact the fires have had on cash flow, loss of customers and supplier disruption,” says NAB Chief Customer Officer of Business and Private Banking Anthony Healy.
There’s no doubt many Australian businesses are doing it tough right now – whether that’s because of the coronavirus outbreak or the summer bushfires.
If yours is one of them, please get in touch. We’re ready to assist you in any way we can and will work through your available options with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.50% as the coronavirus outbreak impacts global financial markets.
RBA Governor Philip Lowe said the coronavirus has clouded the near-term outlook for the global economy and global growth in the first half of 2020 will be lower than earlier expected.
“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Governor Lowe said in a statement.
“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”
The RBA previously cut the official cash rate to 0.75% in October, which was the third interest rate cut in 2019.
Governor Lowe also hinted that more rate cuts could be on the way in coming months, saying the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.
“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.
Prime Minister Scott Morrison earlier in the day said he expected the big banks to “do the right thing” by Australians and pass on any rate cut in full.
“And honestly, I don’t see it any different to what Qantas did when we called out to Qantas and we said, we need your help to get some people out of China,” the Prime Minister said.
With this being the fourth RBA cash rate cut since June 2019, it can get a bit confusing as to just how much of these cuts your lender is passing on to you.
The good news is we’re following the market closely and can tell you which lenders pass this fourth rate cut on to their customers in full, and which lenders don’t.
So if you’d like to find out, then please get in touch – we’d be happy to help break it down for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Employers who have underpaid their staff superannuation have been granted a one-off amnesty to make things right, but that doesn’t mean they’re completely ‘off the hook’.
The Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019, which just passed federal parliament, encourages employers to come forward and pay any unpaid superannuation in full.
Small Business Ombudsman Kate Carnell says while most small businesses do the right thing in this area, with 95% already complying, the amnesty will give them a further six months to ensure they’re compliant.
“This is a one-off amnesty that gives small business an opportunity to get up to date with outstanding payments to current and past employees, without being slugged with the harsh penalties that usually apply,” explains Ms Carnell.
The federal government says the amnesty doesn’t mean employers are off the hook.
Employers must still pay all that is owing to their employees, at a high penalty rate of interest. However, the amnesty will not hit employers with the large lump-sum penalties usually associated with late payment.
Those lump sum penalties generally include a minimum 100% penalty on top of the super guarantee shortfall owed, and up to 200% for the most serious cases.
“We estimate … 7,000 employers will come forward in the next six months before the amnesty ends,” says Assistant Minister for Superannuation Jane Hume.
The Institute of Public Accountants (IPA) chief executive officer Andrew Conway says the one-off amnesty allows employers to clean the slate.
“We acknowledge that small businesses can sometimes experience cash flow issues, making them vulnerable when it comes to meeting their super guarantee obligations by the required due date. This amnesty gives them time to atone,” says Mr Conway.
If you think your business might have made a mistake and underpaid staff super, but you’re worried about the cash flow issues raised by Mr Conway, get in touch.
We can help you apply for business finance that’ll help support both your employees’ future and your business’s cash flow.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Non-major lenders have started offering another 5,000 slots for the First Home Loan Deposit Scheme, which allows first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).
The scheme, which is overseen by the National Housing Finance and Investment Corporation (NHFIC), kicked-off on 1 January but only 5,000 spots were initially available through two major banks – NAB and CBA.
NHFIC CEO Nathan Dal Bon says the additional 25 lenders are located around the country and will provide first home buyers with a range of choices.
“More places are now available to help first home buyers purchase a modest home sooner,” Mr Dal Bon adds.
The NHFIC says the 25 non-major participating lenders below are supporting the scheme by committing to not charging eligible customers higher interest rates than equivalent customers outside of the scheme.
Australian Military Bank
Auswide Bank
Bank Australia
Bank First
Bank of us
Bendigo Bank
Beyond Bank Australia
Community First Credit Union
CUA
Defence Bank
Gateway Bank
G&C Mutual Bank
Indigenous Business Australia
Mortgageport
MyState Bank
People’s Choice Credit Union
Police Bank (including the Border Bank and Bank of Heritage Isle)
P&N Bank
QBANK
Queensland Country Credit Union
Regional Australia Bank
Sydney Mutual Bank and Endeavour Mutual Bank (divisions of Australian Mutual Bank Ltd)
Teachers Mutual Bank Limited (including Firefighters Mutual Bank, Health Professionals Bank, Teachers Mutual Bank and UniBank)
The Mutual Bank
WAW Credit Union
Details on eligibility can be found on the scheme’s website here. You can also check out the property price caps here.
If you want to apply for this new scheme then it’s best to give us a call sooner rather than later, as the major banks have already registered more than 3,000 potential first home buyers for the 10,000 spots up for grabs this financial year.
We’d be more than happy to run you through the scheme in more detail and, if you’re eligible, help you apply through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Applications for the new First Home Loan Deposit Scheme are now open, with 10,000 guarantees available to first home buyers looking to get a leg up into the property market.
Now, with 10,000 spots it might sound like you’ve got plenty of time up your sleeve to take advantage of the new scheme, but consider this: 110,000 Australians bought their first home in 2018.
So if you’re interested in applying for this scheme, you’ll want to put it at the top of your to-do list in 2020 and get in touch with us ASAP.
Ok, so currently people with a deposit of less than 20% usually have to pay Lenders Mortgage Insurance (LMI).
But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without forking out for LMI.
Now, it’s important to note that this is not a handout – it’s simply a government guarantee.
But this guarantee can give first home buyers a “leg up”, says the federal government, as it could save you as much as $10,000 in LMI insurance.
The scheme commenced on 1 January 2020.
In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).
More details on eligibility can be found here.
Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.
– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)
– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)
– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)
– WA: $400,000 (Perth) and $300,000 (rest of state)
– SA: $400,000 (Adelaide) and $250,000 (rest of state)
– TAS: $400,000 (Hobart) and $300,000 (rest of state)
– ACT: $500,000
– NT: $375,000
If you’re considering purchasing your first home in 2020 but don’t have a 20% deposit saved up yet – get in touch.
We’d love to run you through this new scheme in more detail and, if you’re eligible, help you apply for finance with one of the scheme’s participating lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Could you say goodbye to Netflix to take out a loan? That’s one example corporate watchdog ASIC has included in its responsible lending update.
Now, rest assured that you don’t actually have to say goodbye to Netflix to take out a loan. It’s just a “non-essential” expenses example ASIC has provided in its updated Regulatory Guide 209 (RG 209) to provide greater clarity and support to lenders and brokers.
In one of the 39 guidance examples in the updated guide, a prospective borrower named Leah “advises her lender that she could cancel her monthly streaming services” to cover the monthly repayment of a proposed smaller loan.
Rough. We know. Apparently Leah didn’t even get to finish the latest season of The Crown.
But rest assured that if (unlike Leah) you can’t live without your fix of Netflix there’s scope for other non-essential expenses to be cut instead – if you need to make cuts at all (it depends on your financial situation).
“Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements,” ASIC explains in the principles-based guide which it says allows for “flexibility to determine what is appropriate in individual circumstances”.
ASIC has also included a section that confirms small business lending is not subject to responsible lending obligations, irrespective of the nature of the security used for the loan.
Absolutely. There’s an interesting section in the updated guidance where ASIC states:
“We recognise that a consumer may be able to reduce their spending and change their lifestyle in order to afford a particular loan and be able to do so without substantial hardship.”
And a related section that states: “There may be some lifestyle changes the consumer would not be prepared to make to afford credit.”
So come in for a chat. We can discuss with you what your essential expenses and your non-essential expenses are, and how they may impact your credit application.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
A new web platform described as a ‘dating app but for home-ownership’ says it can help users enter the property market in half the time it usually takes.
Mortgage Mates – the brainchild of Perth-based mates Daisy Ashworth and Jess Vesely – uses algorithms to match you with like-minded individuals who share similar housing preferences but also don’t yet have a big enough deposit to crack the property market.
Ways you can search for ‘mates’ include Australia-wide location options, housing choices (apartment, unit, house or land packages), price, age and gender.
Once connected and keen to buy, the duo say they can link you with legal services to help you safely and securely enter the property market.
The co-founders say that by matching up with another user who shares your housing aspirations you can have the security of home-ownership over renting or living in a share house.
The other major benefit of pooling your money with like-minded individuals is increasing your property options, the co-founders say.
Another way to get into the property market in 2020 is through the federal government’s First Home Loan Deposit Scheme, with applications for the scheme opening on 1 January 2020.
Run by the National Housing Finance and Investment Corporation (NHFIC), the scheme this week launched an interactive online eligibility tool to assist first home buyers determine their potential eligibility (with property price caps further down the page).
Under the scheme, some first home buyers will be able to borrow up to 95% of the value of their property without forking out for Lenders Mortgage Insurance (LMI).
Last week it was announced that NAB is the first lender on the panel. The remainder of the panel will be announced in the coming weeks.
There’s one big catch when it comes to the First Home Loan Deposit Scheme – and it’s a bit of a doozy.
The scheme is limited to just 10,000 first home buyers loans each year on a ‘first come, first served’ basis.
When you consider that the number of Australians who bought their first home in 2018 totalled 110,000, if you are planning on using it in 2020, it’s best to get the ball rolling on it now.
So if you’re considering purchasing a property but don’t have a 20% deposit saved up yet – get in touch.
We’d love to run you through the scheme in more detail and help you plan ahead for the new year.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The country’s top financial regulators are concerned banks are ‘too cautious’ when it comes to loans for small business borrowers.
The Council of Financial Regulators (CFR) – which is chaired by RBA governor Philip Lowe and includes APRA, ASIC and federal Treasury – met to discuss the tight credit conditions for small businesses and the associated reduced risk appetite from many lenders.
As a result, ASIC will soon officially confirm that the responsible lending laws don’t apply to small businesses.
In their post-meeting quarterly statement, the CFR stressed that the flow of credit is fundamentally important to the functioning of the Australian economy.
“(We) discussed the concern that lenders’ risk appetite for some types of lending may have swung too far towards caution,” the CFR said.
The CFR’s statement is in response to repeated complaints from bankers this year that tighter small business lending has been an unintended consequence of the Hayne royal commission.
During the meeting, CFR members discussed that in the coming weeks ASIC will release updated guidance on responsible lending provisions.
“It will confirm that responsible lending requirements do not apply to loans made predominantly for business purposes, regardless of the type of security offered for the loan,” said the CFR statement (and yes, they even bolded the ‘do not’ bit!).
The guidance will also assist lenders to better understand their obligations and reduce the risk of non-compliance.
That’s the easy bit – get in touch with us.
The lending appetite in the SME space is something we’re well across and are more than happy to bring you up to speed on.
So drop us a line and we’ll be happy to run you through some of your business’s financing options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
