• Joe Kowalewski

Small businesses may get HECS style loan scheme as JobKeeper winds down

The Federal Government is believed to be considering a small business loan scheme similar to the student HECS. Eligible businesses would begin repayments only after their business income reaches a designated level.

Such a scheme could provide as short-term lifeline for struggling small business owners, particularly with the winding down of JobKeeper.


The idea for a revenue-contingent loan scheme was originally floated by in April last year by Australian Small Business and Family Enterprise Ombudsman, Kate Carnell.


Under the Ombudsman's proposal, the loan would be Federal Government funded and capped at a percentage of the small business’ annual revenue. Applicants would need to satisfy a viability test conducted by an accredited adviser to be eligible.

Ms Carnell said she hoped such a scheme would be introduced.


“Access to credit will be critical to keeping small businesses afloat as various government support measures are withdrawn, rent relief ends and those overheads start to pile up,” she said.


“We know that many small businesses haven’t been able to fully recover from the COVID crisis so this targeted support measure could mean the difference between life and death for them.


“Sudden lockdowns and border closures have hit small businesses hard in recent weeks – it’s no wonder they are reluctant to take on additional bank debt when conditions can deteriorate without warning."


Ms Carnell said that in the best of times, small businesses have struggled to secure finance. Taking into account the enormous challenges that they are now facing, the impact of insufficient working capital could be devastating for the small business owner and staff, not to mention the broader economy.


“The latest ASIC data shows external administrator appointments were up 23 per cent in December 2020 and economists are predicting the number of businesses entering voluntary administration to rise steeply this year.


“A revenue contingent loan scheme would give small businesses the confidence they need to seek funding, so they can survive and employ again," she said.