ASBFEO calls on PM to help sole traders

While nearly two-thirds of all small businesses are sole traders, the needs of these businesses have not been addressed by the government’s recently announced relief package for small businesses, leaving sole traders to struggle, according to Ms Carnell.

“Sole traders, which account for more than 60 per cent of Australian businesses are currently ineligible for cash flow assistance of up to $25,000 because it is only available to businesses that directly employ staff.

“Our view is that government support should be extended to small businesses, including sole traders who are facing dire circumstances amid this COVID-19 health crisis.”

The Ombudsman has suggested a range of measures that could be implemented by the government that could help sole traders, independent contractors and small businesses in the short term, particularly those working in the hardest hit industries – tourism, events and hospitality.

Some of these suggested measures are based on New Zealand’s recently announced relief packages for businesses.

“Sole traders and independent contractors need income support right now without the administrative burden of asset testing,” Ms Carnell said.

“New Zealand’s recently announced wage subsidy scheme providing eligible businesses, including sole traders and self-employed people, with $585 per week (employers can receive a maximum of $150,000) for each full-time employee for a period of 12 weeks is a model the government should consider.

“We also believe New Zealand’s COVID-19 leave and self-isolation support package providing all small-business employees, including sole traders who are unable to work or are caring for others with weekly payments of up to $585 for a period of up to eight weeks is worthy of government consideration.”

Ms Carnell continued: “Sole traders should be eligible for immediate rebates of PAYG quarterly instalment payments paid during the 2019-20 financial year and PAYG payments on income drawn from the business.

“Cash flow is absolutely vital for all small businesses, including sole traders, who should be given one-off access to their superannuation at this critical time.

“Low interest loans should also be extended to those small businesses and sole traders impacted by a loss of trade due to COVID-19, similar to what has been offered to bushfire-affected small businesses,” she added.

“Finally, a national small-business recovery program, including fast-tracked regional infrastructure projects and mandated small business supplier quotas in all government procurement is required for the nation to get back to business,” the ASBFEO concluded.

Almost two-thirds of businesses affected by COVID-19

The call from the ASBFEO comes as Roy Morgan research reveals that, in March, 81 per cent of small businesses (with an annual turnover of between $1 million-$5 million) reported being affected by COVID-19 coronavirus – higher than businesses of any other size. 

This compares to 73 per cent of large businesses with an annual turnover of $50 million or above and 71 per cent of medium businesses with an annual turnover of between $5 million-$50 million who are reporting to have been affected by the virus.

Overall, the research found that more than 60 per cent of all Australian businesses have reported being affected by the outbreak of COVID-19, up 45 per cent from February.

Specifically, 17 per cent of businesses reported being affected “a great deal” by the virus, while 31 per cent nominated that they had been “somewhat” affected.

Commenting on the findings, Roy Morgan CEO Michele Levine said: “These numbers are even more alarming for particular industries, including manufacturing; wholesale trade; recreation and personal; information, media and telecommunications; property and business services; and transport, postal and warehousing. 

“Over 70 per cent of businesses in these industries report being affected by COVID-19 coronavirus.”

She also noted that over 70 per cent of businesses with a turnover of at least $1 million are affected, which comes as a “devastating blow” to an economy “just starting to recover from the widespread summer bushfires”.

Ms Levine echoed the plea of the ASBFEO to expand the stimulus, in order to keep more Australian businesses up and running.

“The Morrison government has already promised over $20 billion in stimulus to keep the Australian economy moving, however, that figure will need to be raised many times over to truly protect the Australian economy from a devastating recession the likes of which Australia hasn’t seen this World War II.” 

[Related: La Trobe Financial offers virus-hit SMEs assistance]