Covid 19 Action Plan for SME’s
Some tips and an Action Plan attached. Don’t be afraid to pick up the phone and ask for help - maximise technology to your benefit as we all adapt to working from home. Whether you need advice in guiding your business through this transition or preparing for the ‘post-lockdown’ business environment, we are here to help in a professional or personal capacity.
Guidelines for Small Medium Business (31 March 2020)
Overview:
Are you experiencing high levels of cancellations for existing bookings or contracts affecting your projected income? Your immediate concern is that your cashflow will be restricted and you won’t be able to sustain existing expenses long term. To consider (staff or no staff), you will need to ensure that you are able to meet commitments from the Company for expenses, wages/drawings, rent/mortgage payments etc.
Interim Suggestions:
1. Covid 19 – Wage Subsidy – many businesses will qualify for this being $585.80 for each fulltime (over 20 hours) employee, and $350 for each part-time (under 20 hours) employee for 12 weeks (paid in a lump sum). This is subsidy is available for all wage earners and self-employed as a non-repayable grant to cover your business wages commitments through this period. https://www.workandincome.govt.nz/products/a-z-benefits/covid-19-support.html#null and as part of the declaration you need to have done the following:
Spoken with your Accountant
Spoken with your Bank
Know and prove there is a reduction of at least 30% due to Covid 19 (not hard during this lock-down)
Endeavour to pay up to 80% of your employee’s normal wage; and guarantee their employment during the period of the claim (12 weeks)
NB! You do not qualify for this subsidy if you have been able to make an Insurance claim with an Income Protection cover or similar
2. Accountant – touch base to say what is happening in relation to the cancellation of work, and seek advice:
advise that you are looking to apply for the Covid 19 Self-employed Wage subsidy
If required, request they organise a payment plan for the April Terminal Tax, and May Provisional Tax payments due (arrange 3 month / 6 monthly instalments)
Discuss GST payments due (you should have these funds set aside so my advice would be to pay this, so you don’t fall behind with future payments)
3. Bank – phone your business banker and explain the future loss and your immediate cashflow situation Request assistance or relief in some of the following areas:
Increase overdraft facility (the OCR has dropped again .75 basis points and trading banks are passing this directly to their clients)
Mortgage facility – if you have one where your personal assets are securing business debt, request a mortgage holiday, or interest only arrangement
Loan facilities – ‘Business Finance Guarantee Scheme’ a government backed short-term loan (5 years) of up to $500k for business owners whose income is between $250k and $80 million per annum
4. Rent – if you pay for commercial premises, check your Lease Agreement and the version. There are some areas surrounding Clause 27.5 where “no access in an emergency” will give cause to possible rent reductions / abatement when you have been restricted to occupation of the premises as directed by any ‘competent authority’ (eg: in this case, the Government and the imposed ‘Lockdown’)
Communication and negotiation are key at these stressful times. Don’t struggle alone if you need help, or just need someone independent to talk matters over with. I am happy to offer any assistance I can in getting your plan in place. Please do not hesitate to contact me (details above).