Aviation Support

JobKeeper finishes on 28 March, and is unlikely to be extended.   The just-announced 800,000 subsidised air tickets for use in Australia is meant to help the travel industry now, until international travel is available (Alan Joyce of Qantas says October?).

That date may be optimistic for now;   it seems to be based on the rollout of the vaccine, but the harder hurdle may be convincing people it is safe to travel. We'll see.   The subsidised tickets should succeed for the 13 locations so far; a good policy which will have direct and immediate benefits.

SME   Recovery Loan Guarantee

This is an update to the SME Loan Guarantee Scheme which was first rolled out about this time last year.   The federal government guaranteed the lender up to 50% of the loan, and the banks took on the other 50%.   This Phase 2 facility is still available until 30 June 2021.

However, versions 1 and 2 didn't hit the mark (only $3B of the allocated $40B was paid).   There were eligibility restrictions and an unwillingness from lenders to take on any risk (even with property).

The new terms include:

- The government will increase its guarantee to 80%, so the lender only has 20% of the risk.

- Loan term has been doubled to 10 years, and the first 24 months payments can be deferred.

- The scheme can also be used to refinance existing loans, or purchase commercial property.

- Loans will be available from 1 April 2021 and must be approved by 31 December 2021.

- The Scheme is only available to JobKeeper recipients for the January to March quarter.   (The Phase 2 loans of 50/50 are available to 30 June for non-JobKeeper recipients.

We wouldn't be sure the banks will support this version either;   they are financing carry-on working capital and they will need to be convinced that there is a viable future for the applicant.   Past financials help, but expect to   provide current accurate year too even if only management accounts, plus a strategic plan on how new turnover and profits will be obtained, profit and cash forecasts for at least 12 months, and a Scenario Analysis (which creates the numbers for the forecasts and the strategic plan and shows the lender why these numbers are reliable).