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As job losses and pay cuts become the new norm for Australians, the question of how to earn a sustainable income has never been more pertinent. But what are your options beyond relying on government stimulus or payday loans which charge exorbitantly high fees? Global microfinance group Grameen has stepped in to offer low-income Aussies another way forward: setting up your own small business. Microfinance refers to small amounts of working capital that are provided to borrowers, typically excluded by mainstream lenders. These loans are backed by social collateral, which means each group of borrowers is collectively responsible for making sure their members meet their repayments.Grameen Australia’s chief executive officer, Adam Mooney says Grameen has a legacy of helping countries and communities out of crisis and its expansion to Australia in the coming months will aim to do just that. “We’re seeing Jobkeeper and Jobseeker being tapered off, so we want to be there at the right time in the right place to be able to provide the incentives to work but also the opportunity to work for many millions of people,” he says. While Grameen began in Bangladesh in the 1970s, its success in reaching 130,000 women in the US over the past decade has proven that its microfinance model can also be applied to “so-called developed countries”. The idea behind Grameen’s model is that it acts as a springboard for entrepreneurs to build up their business and become self-sustaining.“We want to be an enabling financial actor rather than a permanent fixture,” Mooney says.“The ideal scenario for each business is that it generates sufficient return, that it can grow itself and doesn’t need to continually come back for additional loans.”Mooney says the model especially complements Australia’s migrant and Aboriginal and Torres Strait Islander communities who “have got great skills and an aspiration but haven’t had that sort of investment capability to be able to start their own businesses.” For example, Grameen’s group formation structure lends itself well to the principles of collective wealth and collective identity that are culturally familiar to Indigenous people.
As small businesses grapple with the uncertainty of operating amid COVID-19, new research shows cashflow remains the biggest barrier to recovery. For 1 in 3 small business owners, cashflow sits top of mind as their primary worry, according to figures released by business lender Finstro this week.This is based on surveys with 1,200 Aussie small businesses in July, just before Victoria’s second pandemic wave worsened. Finstro’s chief product officer, Tom Whitworth said these concerns around cashflow reflect the “payments crunch” that many small to medium-sized enterprises (SMEs) face right now. That is, there’s a real struggle to balance slow-paying customers with suppliers requesting faster payment times. “Suppliers, who are rightly concerned about securing payments in this challenging environment are increasingly demanding shorter trade terms and often cash on delivery,” Whitworth said. “This makes it difficult for small businesses who are looking to order supplies and reinvigorate their businesses after a period of significantly reduced trade or shutdown.”
In the business world, not everyone has the luxury to wait for extra finance. Luckily if you need that cashflow boost ASAP, whether to purchase stock or pay your suppliers, Commonwealth Bank may have a solution. This week, the big bank launched a new online platform that promises to give its customers access to business loans in near real time. With BizExpress Online, eligible CommBank small business customers can apply for loans of up to $50,000, via their Netbank or the CommBank app. Once an automated lending decision has been made, funds will arrive in their account in as little as 20 minutes. According to CommBank’s business banking group executive, Mike Vacy-Lyle, BizExpress Online builds on an earlier product that was introduced to speed up the lending process.“When we launched ‘BizExpress’, the aim was to provide a simpler and faster lending experience for our small business customers, with same day decisions and funding within a week,” he said. “Our latest investment in the new digital version makes it even easier and quicker for our customers to get the financial support they need.”Right now, BizExpress Online is only available with business lending under the government’s SME Loan Guarantee Scheme. Under the first phase of this scheme, 50% of all new three-year unsecured business loans of up to $250,000 issued by participating lenders until 30 September 2020 will be guaranteed.“Small businesses need quick access to cash flow to keep them going through these tougher times - and BizExpress Online aims to provide them with this,” Vacy-Lyle said. This funding also comes with waived fees over the life of the loan and deferred repayments for the first six months.CommBank expects BizExpress Online will be expanded to other non-scheme loans and products in the coming months.
As Victoria enters its second lockdown and new community transmission cases are recorded daily in NSW, the battle against COVID-19 is far from over. That’s why for small businesses across Australia still fighting for survival, getting their hands on the right financial support and guidance has never been more essential. So if you’re pondering where to look for information and assistance, we’ve made your search a little easier. Below we’ve compiled a list of Aussie-based initiatives and resources that have popped up to help your business get back on its feet.
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