THE STATE Government’s new Business Support Loan Scheme has opened for businesses in the hospitality, tourism and seafood export sectors. The Minister for State Growth, Michael Ferguson, said interest free loans of between $20,000 and $250,000 have been made available to assist eligible local businesses through the COVID-19 virus.

he first three years then payable at State Growth’s commercial loan interest rate from year four onwards,’ he said. Loans are available for business continuity purposes, eg:
• purchasing business plant and equipment
• improving distribution channels and online shopping accessibility
• implementing initiatives to improve the sustainability and viability of the business
• ensuring essential business continuity is maintained. Mr Ferguson said, ‘Generally loans will be considered for eligible businesses in Tasmania that operate in the hospitality, tourism and seafood export sectors, as well as related supply chain businesses and those that can demonstrate they have been significantly impacted by the outbreak. ‘Loans will be available to businesses with a turnover of $10 million or less as per the applicant’s most recent financial statements. However businesses with turnover in excess of $10 million per year that operate in multiple locations will be considered by exception.

‘We will continue to work closely with local businesses so they are ready to continue trading and return to full strength once we overcome the immediate COVID-19 threat.’ The scheme will be complemented by the Federal Government’s stimulus and support packages, which will be of particular value in helping businesses maintain links with their staff and to prepare for the future beyond COVID-19. Business academics from the Australian National University and Canberra University have urged the Federal Government to make income-contingent loans available along the same principles as HECS loans to university students. Professor Linda Botterill from Canberra wrote in The Conversation that providing revenue contingent loans for businesses would be a bridge to a sustainable recovery. ‘This would have major potential to sustain the Australian economy during a sharp temporary downturn, while not putting additional pressure on future fiscal solvency,’ she said. The reporting of business revenue is a quarterly legal requirement of business through the existing Business Activity Statement which is used to collect the GST. ‘Unlike profits, revenue cannot legally be manipulated to suit the timing of repayments. The revenue-contingent loan obligation would be linked to the Australian Business Number,’ Prof. Botterill said. ‘In the case of a small business, the government could provide a loan, which would be capped at a level reflecting a firm’s capacity to repay when revenues recover. This could be a fixed amount (for example 25%) of the average of the past three years of annual revenue. ‘To minimise the chance of non-repayment, eligibility could be restricted to firms that have a good chance of future solvency as reflected, for example, in them having been around for a fixed number of years (for example 3 years).’ Prof Botterill said the government would need to set a repayment rate, and past modelling has revealed small rates of say 5% to 8% of future annual revenues would be sufficient. For more information or assistance with your application call Business Tasmania on 1800 440 026 or email ask@business.tas. gov.au. Applications are available on the Business Tasmania website: https://www.business. tas.gov.au/covid-19_business_ support_packages.