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 no. is 1800 413 828