On 28 July 2021, the Commonwealth and Victorian Governments presented new recovery packages for small businesses. The new support packages will offer $400 million in support to small businesses to be funded equally between the Commonwealth and Victorian Governments.
There are five key elements to the support packages to assist businesses cope with the continuing effects of COVID lockdowns.
The five elements consist of:
- Business Continuity Fund will deliver grants of $5000 to approximately 30,000 businesses. There are 24 eligible sectors that include gyms, cafes, restaurants, catering services and hairdressers. Businesses existing within the CBD will be eligible to receive an additional $2000. Recipients must have received or have been eligible for the previous government Business Cost Assistance Program to benefit from this new fund.
- Licenced Hospitality venues have a new $70 million fund available to apply for up to $20,000 relief grants. There will be a further $2000 in grants available if those businesses are located within the CBD.
- Commercial Tenancy Relief Scheme and Landlord Hardship Fund will be fully funded by the Victorian Government. An $18 million package will provide support to landlords who provide rent relief to their tenants. The previous Commercial Tenancies Relief Scheme (CTRS) will be reinstated by enabling legislation to provide rent relief to small to medium commercial tenants and their landlords.
- Small Business COVID Hardship Fund will provide a new $85 million fund to support small businesses who have not been eligible under existing business support funds. This fund is available to small businesses with a payroll of up to $10 million who have experienced a 70% or greater reduction in revenue. The eligible grants will be up to $5000.
- Alpine Business Support Programme will receive $9.8 million to deliver grants between $5000 – $20,000 to 430 Alpine based businesses. There will be an additional $5 million support to Alpine resort operators and management boards.
Commercial Tenancies Relief Scheme
Of particular interest to many of our clients will be the reinstatement of the CTRS. As many of you would be aware, the CTRS expired in March 2021. The reinstated CTRS will operate from 28 July 2021 until January 2022. Originally, JobKeeper was a defining eligibility criterion, but without this framework, it is unclear what thresholds will now need to be met.
While there are many things yet to be answered by the Government, some takeaways from the announcement include:
- The new scheme will be available to tenants with a business turnover of less than $50 million and who can demonstrate a 30% downturn in trade due to COVID. It is possible that the effects of COVID on the turnover of many entities may see tenants who were previously not considered Small and Medium Enterprises, now fall within that definition. There is no further information as to how these thresholds will be defined and tested by the yet to be introduced legislation. We will provide a further update when the thresholds are announced.
- The proposed legislation will maintain the requirement for landlords to provide rent relief that is proportionate to the tenant’s downturn in trade compared to pre COVID trade figures.
- At least half of the sum of rent relief must be provided as a waiver.
- Landlords cannot lock out or evict eligible tenants without a determination from the Victorian Small Business Commissioner.
- Mediation will continue to be available to landlords and tenants who cannot reach an amicable position.
- The new legislation will operate retrospectively from 28 July 2021.
With both houses of Parliament sitting 3-5 August 2021 and then again 17-19 August 2021, we expect the passing of the new enabling legislation to be passed within these settings.
For both landlords and tenants, this is an opportune time to prepare yourself for the discussions that will no doubt happen. It is also important for you to make yourself aware of whatever relief may be available to you and your business.
As we know more, we will continue to update you.
If you have any questions, please contact a member of our Property and Leasing team.
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