Cure ‘found’ to stop business deaths from COVID-19
SMALL businesses urgently need extra protection from bankruptcy, or the deaths of broken business owners will outnumber those from the health crisis, the government is being warned.
Small Business Australia director Bill Lang has called for a special COVID waiver on bankrupting businesses as "potentially hundreds of thousands of business owners are going to be insolvent" and suffer related mental health issues.
"This will save more lives than all the health responses to minimise the spread of the virus, and it's lives per year - bankruptcy lasts for seven years," Mr Lang said.
"These people were pushed out of business through no fault of their own," he said.
"A lot of blokes, in particular, have their identity tied up in their business."
Small Business Australia says new research suggests 68 per cent of the nation's 2.2 million small businesses are under financial stress. It says 440,000 small businesses are closed temporarily or permanently and 600,000 are likely to fold.
Mr Lang said a new "COVID insolvency" class of bankruptcy should be put in place as quickly as possible and should last for at least two years. It could protect business owners from punitive parts of bankruptcy such as being banned from directing companies for seven years and having a long-term black mark on their name.
In March the Federal Government introduced temporary bankruptcy relief measures, including a six-month extension to protection from creditors, but these are set to end in four months.
Mr Lang said payments to business owners and workers through the $130 billion JobKeeper scheme would end in September "which is precisely the time that many businesses with increased or deferred loans or obligations will be forced to start paying again".
Council of Small Businesses Organisations Australia executive director Peter Strong said many business owners feared that large landlords were waiting to start court actions to claim back-rent.
"Big landlords have never been afraid of bankrupting someone," he said.
"The mental effect is huge.
"These are people who aren't bankrupt because they're bad businesspeople or made a bad decision. They are bankrupt because of the virus and that means we lose good efficient and effective businesspeople to the economy."
The government has not indicated if it will introduce fresh bankruptcy relief, but Treasurer Josh Frydenberg said it had made more than 80 regulatory changes to provide greater flexibility.
"The Government is providing an unprecedented level of support to businesses through our SME loan guarantee scheme which has already seen around $1 billion in loans approved to more than 11,000 businesses," he said.
"Over 500,000 small and medium-sized businesses have now received over $9 billion under our cash flow boost program.
"The measures the Government and Industry have implemented as part of its economic response to the coronavirus will help small and medium sized businesses build a bridge to the other side of the crisis."
Originally published as Cure 'found' to stop COVID-19 business deaths