The Morrison government is able to claim credit on managing the health crisis, but managing the economic crisis is only becoming harder.
That is not just a matter of the limits on eligibility. The gaps include the need for eligible businesses to also keep paying their employees until backdated payments start to come through after the first week in May. For many, the difficulty of finding enough money to do that has been threatening to swamp their frantic survival efforts right now let alone their ability to manage the uncertainty of the future.
Banks are setting up hotlines for businesses wanting bridging finance. Sam Mooy
Yet it seems the Treasurers repeated reassuring advice that companies should just talk to their banks about getting bridging finance is hardly the seamless experience the government had hoped for.
The Prime Minister has regularly praised the banks for stepping up and their strong co-operation in assisting their customers and the economy to get through this crisis, and he did so again on Thursday. His tone was still noticeably sharper, saying he was aware of business frustrations about accessing bridging finance.
It is important that the banks stay up to the mark here, Morrison said. I am concerned at the increasing number of stories we are getting and those issues I am sure are being raised directly with the banks, but we need those turn around times to improve.”
Following a phone call between the banks, the Treasurer and ATO commissioner Chris Jordan, the banks will each now set up a dedicated hotline for those needing bridging finance.
“It was a very productive discussion. And we emphasised the need for the banks to provide the support to those businesses,” Frydenberg said as he announced the new hotlines.
“Importantly, they have also agreed to expedite the processing of all those applications to the front of the queue.
But while Morrison emphasised the banks familiarity with their customers, the approvals process for lending is not just overly complicated and too slow for many. It also assumes they will qualify for a tick of approval.
These banks know their customers, they know these businesses, they work with these businesses, they are there to stand by these businesses in their time of greatest need and that is now, Morrison said bluntly. So they know their history. They know their trading performance. They know what they are capable of doing.
But many small businesses have preferred to avoid bank loans due to the need to put up their own homes as collateral, so they dont have the same credit track record. The big banks have also made it clear they will have their own priorities by providing credit to businesses that were operating well ahead of the coronavirus hitting. Businesses that were under pressure or with less reliable balance sheets would be more likely to go to the back of the queue including for bridging finance, it seems.
This reflects a larger longer-term contradiction about business credit and how much it reflects lack of demand rather than excessive regulation.
ASIC likes to insist against considerable evidence that its ever tougher interpretation of responsible lending laws had nothing to do with the low rate of credit made available to small business in recent years. But the shadow of the Hayne royal commission and ASICs new willingness to prosecute still hangs heavily over banks willingness to lend.
Now the certainty of increased bad debt levels as a result of COVID-19 wont have made bankers any more relaxed, despite Canberras provision of tens of billions more in government-backed guarantees to encourage such lending.
Since formal applications opened Monday, around 275,000 businesses have already filled in the ATO forms around half of them sole traders. That number will quickly increase given more than 900,000 businesses registered their interest after the scheme was announced on March 30.
No economies or governments have managed any better and most far worse given the extraordinary global devastation wrought by COVID-19. Australias suppression strategy has also ended up being world leading. But federal and state governments are still spooked by the prospect of a second wave of infection if the economy is opened up. Any return to shuttered businesses would only compound the level of economic catastrophe.
The government insists it will look at various reform reviews over the last decade mostly mouldering away with fresh eyes. The aim is to see how these can best help Australians get back on their feet and have a business-led recovery that will put Australia in an even stronger position in the future.
But for most businesses now, its about surviving the present.