26 Mar Coronavirus – Queensland Government Jobs Support Loan – All You Need to Know
THE QLD GOVERNMENT HAS ANNOUNCED THIS SCHEME HAS NOW BEEN CLOSED TO ALL NEW APPLICANTS
The Queensland Government has just a couple of hours ago released their Job Support Loan package. The details of this package are summarised below our recommendations.
Our Recommendations and General Advice*
*The information contained in this post is general information only and cannot be relied upon for any reason whatsoever. While we have made every effort to ensure it is correct and up to date things are changing rapidly and before you do anything you should firstly contact our office for specific advice for your circumstances.
We generally support these loans for our business clients who wish to supplement their loss of earnings to meet the costs of trading through this difficult period. They may not be appropriate for all clients so please ensure you take qualified advice specific to your circumstances prior to commencing an application process. Time is important though because funding is to be delivered on a first in first served basis.
Prior to commencing your application we recommend you:
- Assess your eligibility for the loan.
- As with all borrowing, you consider your future trading prospects and your capacity to make the loan repayments as and when required.
- You compile your financial statements for the tax years ended 30 June 2018 and 30 June 2019. We can prepare these as a matter of urgency of you do not already have them available. CLICK HERE to book your appointment with one of our qualified team.
- Commence your application as soon as you have compiled the necessary documentation.
- To ensure your application can be processed without delay, you should allow us to run through a quick checklist with you. Our fee to attend to that check is minimal and it may mean the difference between receiving the funds or not. CLICK HERE to book your appointment with one of our qualified team.
Grow Accounting offers a full range of business advice and assistance throughout this pandemic. CLICK HERE if you would like more information about how we can help you and your business.
Summary of the Loan Scheme
The Queensland Government $500 million COVID-19 Jobs Support Loans scheme is being provided to assist Queensland businesses and non-profit organisations financially impacted by COVID-19 retain employees and maintain their operations.
- Hold an ABN and be registered for GST; and
- Have one or more equivalent full-time employees in Queensland. A full-time employee is an employee who works at least 35 hours each week in the business and includes working owners; and
- Have operated the business or non-profit organisation since 1 July 2017; and
- Have suffered a loss of income as a result of COVID-19.
Further criteria to be assessed upon application:
The business must:
- Be considered viable under normal business conditions; and
- Be able to service the loan under normal business conditions; and
- Intend to continue operations after receiving the loan; and
- Intend to use any surplus liquid reserves or normal credit sources up to normal credit limits to continue operations. This means you cannot use the loan to increase your savings but you must be prepared to continue to fund the business from your own sources to enable it to continue to operate.
Concessional loans are available up to 50 per cent of an eligible entity’s annual wage expense, to a maximum loan of of $250,000. The loans are available to both incorporated entities, sole traders, partnerships, and incorporated non-profit organisations.
For incorporated entities the maximum is calculated with reference to an applicant’s wage and salary expense including superannuation over the 2017/18 and 2018/19 financial years. For sole traders, the maximum is calculated with reference to an applicant’s drawings over the 2017/18 and 2018/19 financial years.
At this stage we are not clear on whether trust distributions to working beneficiaries are included but are working hard to find that out for you. If you are trading through a trust and have not paid wages we recommend you CLICK HERE to seek advice specific to your circumstances.
Loan Security and Terms
- Loans up to $100,000 will be unsecured and not require any security.
- Loans between $100,000 and $250,000 will be secured by a charge over the assets of the business called a General Security Agreement. These agreements usually cover before and after acquired property and we expect that to be the same although we are yet to see a copy.
31 March update: We are receiving a lot of the same question about security and will update this post about your personal liability in the event of a future liquidation when we can. If this is an issue for you, we strongly recommend you contact us immediately for advice. Thank you.
Loan Terms and Interest Rate
- The term of concessional loans is 10 years.
- The first year of the loan will be repayment free and no interest will be charged.
- Following the first year, payments will be interest-only for two years.
- After this, principal and interest repayments will apply for the remaining term.
- Loan payments when they commence will be on a monthly basis.
- An interest rate of 2.5 per cent will apply to the loan from commencement of the second year and
for the remainder of the loan term.
What Costs Can be Met from the Loan
Concessional Loans may be used to meet an entity’s working capital expenses. Examples of eligible expenses include; paying wages, creditors, rent, and other costs you must incure in your business operation. You cannot apply loan funds towards refinancing existing business loans or buying new equipment.
Summary and Further Information
We support this package for all clients wishing to trade through these difficult times. for further information please CLICK HERE to book an appointment with our team or call the office on (07) 54489600.
A Word of Caution
Please exercise care listening to friends’ advice and treat what you read on social media with a high level of skepticism if it is not directly from a government or support agency. We will be doing our utmost to ensure everything you need to know for your business is accurately summarised here on our blogs and Facebook page but we cannot complete with outrageous claims from some areas of the community promising all sorts of additional benefits.
We remain open and available on the office phone (07) 54489600, email firstname.lastname@example.org, Skype, Zoom or the old fashioned phone numbers (07) 54489600 as usual.