Rent and Employee Payroll Help for SMBs

While small business owners were bravely meeting their debts, payroll and rent through the beginning of the Covid 19 pandemic, it’s getting tougher as each month passes.

US, Canadian, UK and Australian governments are forging ahead with loans and grants to help small businesses pay their rent, i.e, those businesses forced to shut down. In our series of posts focusing on help for small business, we’d like to expand our coverage to Australia, Canada and the UK.

As the Corona Virus pandemic response continues, small businesses are experiencing increasing pressure regarding their rent payments. Many face big tax bills as well.  And landlords too are at risk of business failure if they can’t generate enough cash flow to pay their mortgages and bills.

SMB Landlords are Key Cog in Local Business Wheel

The initial programs each government enacted helped protect tenants but not landlords, who are a key part of the economic chain too.

While small businesses were shut down for an extended period, rental property owners were still expected to pay their mortgages and operations expenses. That’s an unfair situation and one that can’t continue for months on end. When you consider how leveraged some are financially, the situation might be worse than anyone suspects.

Canada’s Response in Keeping Their SMBs in Business

In Canada, Canadian Prime Minister Justin Trudeau announced this morning a new initiative to limit small business rent payments to 25% of the amount due. The Canadian government will pick up the tab for 50% of the rent due. However, the matter of the remaining 25% due is still up in the air. According to leases, tenants must pay their rent at some point.

The Canadian government’s effort amounts to a 75% relief for small businesses who rent their premises. Of course this would include hair salons, gyms, barber shops, flower shops, day care centers, Seniors care centers, multifamily landlords, property management companies, construction firms, builders, Realtors, retail shops, restaurants, auto repair shops, dental offices, and many more.

The Canadian response comes in warnings that up to half of Canadian small businesses could fail soon without assistance. Canadian Federation of Business president Dan Kelly said 70% of the CFIB’s 30,000 members pay monthly rent for their business premises. Of those, 55% are reporting they can’t afford to pay their rent for May.

Kelly is asking the government to forego cumbersome qualification criteria to allow business owners to get help soon. However, rules are in place to put a hold on rent payments and stop any evictions.

Small Business Rent Aid in the US

Yesterday, President Trump’s $484 Billion aid package was passed by the House of Representatives. The Democrats had blocked an earlier bill for $350 Billion. The new Federal aid includes extra funding for the PPP program, and grants for hospitals and more Corona Virus testing.

The latest US Government funding includes:

• $350 Billion in new funds for the PPP program (CARES Act)
• $75 Billion in new grants to hospitals that are overwhelmed with Covid 19 patients
• $25 Billion for testing the Corona Virus
• $60 Billion for SMB Administration disaster assistance loans and grants.

These are in addition to the $2.2 Trillion CARES Act funding recently delivered. Landlords and small businesses who need help should investigate the full extent of the program and where they can get the specific help they need.

Alternatively, you can go directly to the US SBA website  for small business assistance programs.

Small Business Support in Australia

To help Australian businesses and landlords to survive during this extraordinary crisis and avoid bankruptcy, its Government is providing temporary cash flow support of up to $100,000 for eligible small and medium-sized businesses, and not-for-profits (NFPs). These are companies which must keep operating, pay their business rent, electricity and other bills and retain their staff.

There’s no doubt the real estate and rental housing market across Australia is taking a severe lashing. Since real estate underpins everything from manufacturing to retail to housing, keeping cash flowing staves off a looming disaster.

The key purpose to help small to medium sized businesses, who are the most vulnerable to failure, to survive this crisis and continue in operation when the emergency subsides. You can learn more about temporary relief for Australian businesses at the AUS government’s website

The Australian government announced a number of other programs for small business and employer support during th Covid 19 padic period. The programs include a JobKeeper payment, cash flow support for employers, and assistance with apprentice and trainee wages.

Some of the supplements in Australia are:

• JobSeeker Payment
• Partner Allowance
• Sickness Allowance
• Youth Allowance
• Parenting Payment
• Farm Household Allowance
• Special Benefit

Australians are eligible for 1 of the above payments. The government will pay up to 6 months of coverage.
According to Services Australia, the Coronavirus Supplement is a fortnightly $550 payment on top of your eligible income support payment.

For employees, in order to access payments you must be all of the following:

• currently an employee of an eligible business
• full time, part time or a casual employee employed with an employer for at least 12 months as of March 1st, 2020
• must be at least 16 years old
• must be an Australian citizen, the holder of a permanent visa, or a Special Category (Subclass 444) Visa Holder
  a resident for Australian tax purposes on March 1, 2020.

Your employer will pay you at least $1,500 a fortnight before tax if they employed you on 1 March 2020.

Business Relief in the UK

In the UK, the British government launched the Coronavirus Business Interruption Loan Scheme. It provides loans, asset financing and invoice financing to aid cash flow for small businesses suffering during the pandemic. Those who don’t meet eligibility requirements must resort to regular bank loans at lenders standard terms.

Assistance within the CBILS includes:

• loans of between £25,001 up to £5m will be made available
• loan terms of 1 to 6 years
• low lender fees or no arrangement fees
• loan payment moratorium for the first 12 months
• no early repayment charges in most cases

What has to be stated about the government small business assistance programs is that funds often run out quickly. Those small business people (including landlords and property managers) who need help must get organized with paperwork and apply soon.

Much of the programs intent is to help small businesses meet current debt payments, and pay rent due to get them through this immediate period of difficulty.

Learn more about small business assistance in the US and about how the pandemic is introducing a new business environment supported by virtual business solutions.  The new rental market will look much different in the 2nd half of 2o2o and beyond.

Photos courtesy of Pixabay.com photo site.

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