So, what’s happening in the finance world?
The Instant Asset Write-Off has been extended.
The good news is that the 100% Instant Asset Write-off has now been extended to 31st December 2020. The updated position is:
- 100% write-off if goods are under $150k and ready for use prior to 31st December 2020 or,
- 50% if goods are purchased and ready for use prior to 30th June 2021. The remaining 50% can be depreciated within normal guidelines.
It continues to be a good time to add equipment to your operations.
The Government-backed loan offering has flopped.
The government is to be congratulated for being quick to provide banks and other second-tier financiers with access to a stimulus package in which they would underwrite 50% of any losses incurred on loans. However, the reality is that very few loans have been written under this program to the businesses who really need them. Additionally, the banks have provided loans in line with their normal credit criteria and with extra rigorous assessment processes. There are exceptions, however, most loans have been provided to existing bank customers and only where the bank has collateral security to ensure they are not at risk. Talk to us if you need access to additional working capital – we have a range of options available.
So, what does this mean for your business?
Post COVID-19, it has become more obvious that a single bank cannot provide you with all your finance needs. You will need a mix of specialist financiers and a bank – each chosen for their specific niches – to meet your needs. More information is required than ever before to secure finance approval. You can’t fight the requirement for information so it’s important that your bookkeeper and accountant are aligned to provide what is needed. The major banks still have a place, however, in our experience they prefer to cherry-pick rather than try and find ways to work with businesses. There are an ever-growing number of players in the working capital, trade finance and equipment finance space who are in many ways leaving the banks behind. We can help you find the right providers for your business.
Older assets: The impossible is still possible.
Although most financiers will tell you it can’t be done, it is possible to finance software and older and more specialised assets. Finance is also available to import major equipment purchases from overseas suppliers using escrow facilities and letters of credit. Most of our clients have taken the opportunity to improve their processes, upgrade their automation and make the necessary changes to ensure the business is viable for another 5 years. The objective being to come out of COVID-19 better than before it all started. Now more than ever businesses need the very best finance advice experts around them helping with short term solutions which are aligned to their long-term business objectives.
The Back Story: A back-office perfect storm.
Most financiers have suffered internal administrative meltdowns, which have had serious flow-on effects to processing times for new applications and settlements. What had typically taken half a day now takes weeks – with no immediate end in sight. This started when the financiers suddenly needed to process vast numbers of loan deferment for hardship requests and, for many, to also unwind the trend of moving to offshore processing centres, all while having most of their staff working from home. This, combined with the withdrawal of low document application processes, created the perfect storm for back-office meltdowns.The positive is that we have become very adept at working out which financiers will give us the best and quickest result.