FINANCIAL DISTRESS RISING AMONG SMALL BUSINESS IN BUSHFIRE/COVID-19 "DOUBLE WHAMMY"

New data from the Small Business Bushfire Financial Counselling Support Line shows that the “double whammy” of bushfires and COVID-19 is causing significant financial stress to small business.

Financial counsellors on the Support Line provide free and independent advice to small businesses about managing debt, as well as information about government assistance packages.

General manager of the Small Business Bushfire Financial Counselling Support Line, Helen Davis said that “the majority of the small business clients we have assisted have not been directly affected by flame or smoke damage”.

“Rather, the impact has been through a loss of trade. For example, the closure of roads preventing access to markets or reduced tourist numbers.

“Increasingly small businesses are contacting us because of the impacts of COVID-19. Bushfires recovering from the bushfires may have been counting on an improved local business environment from Easter 2020, which did not eventuate because of COVID-19.

“Our experience is that many callers are overwhelmed by the situation in which they find themselves. Their business is struggling, and they have business and personal debts they are unable to service.” Ms Davis said there had been callers unaware of the existence or implications of significant contract terms.

Others were unclear about the implications of giving a personal guarantee or security over personal assets when seeking credit for business purposes.

“When these small businesses find their way to a free financial counselling service such as ours, they are usually facing serious, if not insurmountable financial issues, as well as significant stress and anxiety,” Ms Davis said.

Ms Davis said the impact of bushfire and drought, combined with COVID-19, had had a compounding effect on small businesses grappling with a sustained period of financial challenge and loss of trade. Most had used up any financial and emotional reserves.

The $10,000 grants provided to small business impacted by bushfires, and more recently, similar COVID-19 grants and JobKeeper had been useful in assisting businesses to “band aid” and continue operating in the short term.

However, Ms Davis said as grant monies were expended and COVID-19 support was removed, there would be an increase in the number of businesses needing to restructure or close.

The free Small Business Bushfire Financial Counselling Support Line number is 1800 413 828 or go to the website HERE.