Following the PM’s announcement on Friday of a 3-step plan to lift the country out of Coronavirus shutdown, Australia, in common with a few other countries around the world, will now prepare to ease some restrictions. Different states will proceed with the measures at their own pace. For instance, in NSW as of Friday 15 May, cafes, restaurants, outdoor sport, weddings, house auctions and some other functions can accept up to 10 people at a time.
This is great news for many SMEs, who can start planning to emerge from “hibernation”. But it’s not quite going to be business as usual. What kind of adaptations will we have to make for the new work and business environment, at least for the short to medium term?
The details of mandated workplace requirements will become clearer over the coming weeks. It could involve anything from
- Fewer staff in the workplace at any one time – perhaps setting up small teams who alternate between working from home and the office
- Greater physical distance between workstations or between staff and customers, which means adaptation of business premises
- Increased cleaning of high touch or traffic areas
- Protective apparel for staff such as masks or latex gloves in regular use; possibly even daily temperature checking or health screening of employees
As SMEs adjust to the new environment, or pivot to cater for altered customer demand, they will have to review their strategy. Additional working capital to re-boot their business is going to be top of mind.
Strategic activity to be funded could include: rebuilding inventory levels; hiring new staff or re hiring valued ones; increasing marketing initiatives; temporarily adapting business premises for social distancing; and covering the cashflow gap to allow for slow debtor collection.
At Banjo we expect to see strong demand for loan funding beginning later this month, through to September/October 2020.
The borrowing capacity of many businesses may be reduced due to: their existing debt levels; other loans taken out; lack of revenue; or non-payment by their customers. Typically, clients will seek to combine the refinancing of existing debt with working capital recovery funding into one loan.
Banjo will be on the frontline of helping businesses start to build their recovery. However, a few factors mean that it will be more difficult for lenders to assess clients’ ability to pay loans. Approvals may take a little longer than usual. Banjo will work with clients and their advisors to ensure we fully understand a client’s circumstances and lend responsibly.