Small business groups want this week’s economic update from the federal government to include a greater commitment to small business procurement, flexible loans and more economic data to help SMEs recover from the economic fallout of the pandemic.
The Mid-Year Economic and Fiscal Outlook (MYEFO), to be released on Thursday by Treasurer Josh Frydenberg, is expected to show an improvement on the federal government’s bottom line by more than $10 billion.
Speaking to SmartCompany, small business advocates say they are not expecting anything near the $1 billion the Treasurer has already pledged to aged care. What they do want to see, however, is the federal government procure more goods and services from small businesses, consideration of revenue contingent loans and better data.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell wants to see greater commitment from the federal government in the MYEFO to increase its rates of procurement from small businesses.
“It’s an area that the government could make a big difference in and very cost effectively,” Carnell says.
“At the moment only 26% of the total of Commonwealth contracts go to SMEs and we think they should be aiming at 30 to 50%.”
Revenue contingent loans
The support small business groups would like to see depends on how the economy fares next year, particularly after JobKeeper ends.
However, Carnell says many businesses are already struggling to get loans because banks are concerned about their ability to service the loans.
This is why Carnell would like to federal government consider revenue contingent loans, which are non-traditional commercial loans that are paid back based on the revenue a business makes.
“We think that would give SMEs a lot more confidence to take out a loan,” Carnell says.
Carnell says there are particular industries that will be most in need of loans next year, including independent cinemas and travel agents because they are affected by international travel and the effects of COVID-19 on the US film industry.
“There are certain businesses that have particular problems that are not in their control and they’re ones that will need ongoing support and we think revenue contingent loans are a good way to go,” Carnell says.
Council of Small Business Organisations Australia chief Peter Strong says he wants to see significantly more data about what is happening in local economies across the country.
“We want to see how they’re performing to help us get that information out to industry and not just to retail and hospitality, but also across to manufacturing,” Strong tells SmartCompany.
Strong says it is crucial the government releases detailed information in the MYEFO about employment that provides insight on unemployment rates and skills at a community or ‘post code’ level.
“Information is everything now as we move forward,” Strong says.
When asked whether he would like to see additional stimulus for the small business sector, Strong says he is not expecting any funding to be announced at Thursday’s update.
“We aren’t looking for funding at the moment, we’ve had a lot,” Strong says.
“Of course you always want more, but at the moment, we’re putting together submissions for the May budget”.