An idea for ScoMo: RentKeeper
It has been another rough week for Victorian businesses, with lockdown restrictions set to continue in some form until at least late November, possibly longer.
It’s a cruel blow for a lot of the business owners I’ve spoken to this week, with many making the difficult decision to close their doors as the pressures of rent and keeping a business afloat become too much.
It made me think that there needs to be a new form of support from government, one I’m calling RentKeeper. It would help small businesses and sole traders who cannot afford their rent.
I would make it available from October 1 until the end of March for those businesses that are already on JobKeeper and have had another negative quarter in the September quarter.
Something like RentKeeper would keep businesses in their premises under a deal where they would share the cost of the rent with the state and federal government. For example, if you pay $1000 a week for your lease, the business would pay $500, and the government would pick up the balance.
It can still be means tested, just as the next round of JobKeeper will be, but the evidence I am getting is that many small business owners are not good negotiators with landlords, and they need support.
It would mean employees can stay on the books, and when lockdown starts to ease at the end of the year the business doesn’t have to find new premises to continue operating.
This would also mean that landlords still get their rent, which can enable them to continue operating their own businesses and providing for their families as well.
The fewer businesses we can have closing their doors as times get toughest, the stronger we will all bounce back when we find our way to a Covid normal.
Another thing for business owners to keep an eye out for is the low interest Small and Medium Enterprises (SME) Guarantee Scheme, which is supporting up to $40 billion worth of lending to SMEs (including sole traders and not-for-profits).
This scheme was launched earlier in the year, and involves the Government guaranteeing 50% of new loans issued by eligible lenders to SMEs, but most of the scheme remains under utilised.
The details on the relaunch are still coming, but it would be worth looking into the scheme if you’re a small business owner, especially when looking at the re-opening of the economy over the next 12 to 18 months.