A small business lobby group is warning of a fresh wave of insolvencies when the state government’s COVID-19 Commercial Tenancy Relief Scheme ends in late March.
The scheme’s helpline for small business owners hit by the COVID-19 crisis, or their landlords, has received more than 300 calls a week on average in the 11 months it has been running.
As businesses brace for the end of the relief scheme, which expires two days before the JobKeeper wage subsidy comes to an end, the state’s Small Business Commissioner said the program had kept thousands of rental disputes out of the courts and tribunals and was still receiving a steady flow of inquiries.
The commission said it has helped to settle more than 2160 disputes over unpaid rent and other alleged breaches of lease conditions, although several hundred matters had been given the green light to proceed to VCAT after landlords and tenants were unable to reach an agreement.
The Council of Small Business of Australia is warning that the end of the scheme, which has protected businesses against evictions or rental hikes since its introduction in March 2020, is going to be a “big issue”.
The council’s chief executive, Peter Strong, said he is worried that landlords will take aggressive action against businesses once the state government’s protections have expired, in a bid to recover rental arrears that have built up over the past 11 months.
Mr Strong said there was no data on how much was owed or how many businesses were in trouble but anecdotal evidence from his group’s members suggested there were grounds for serious concern.
“We’ve got businesses out there, is what we hear from our members, that have built up quite big debts with their landlords and technically they’re going to be insolvent,” Mr Strong told The Age.
“They’ve forgiven some [of the debt] but others have just been put on hold and some of the big landlords, they have a history of taking people to court, threatening them, bankrupting them, all sorts of things.”
Mr Strong says he has been talking to both the state and federal governments about continued relief for business tenants past the March cut-off date for the relief schemes and was pushing, with the backing of Small and Family Business Ombudsman Kate Carnell, for a government-funded ’HECS-style loan scheme for businesses.
The program would provide low or no-interest loans with borrowers beginning repayments when their turnovers reached an agreed level, allowing a business to pay their landlords and other creditors while trading their way out of trouble.
High ranking federal Treasury officials are reportedly considering the proposal but the office of Treasurer Josh Frydenberg said on Friday that it did not comment on “budget speculation”.
The Victorian property industry says landlords have worked with tenants to ensure businesses remained viable throughout the pandemic crisis with property owners often suffering financially alongside their tenants.
“Throughout the COVID-19 pandemic, commercial property owners have been the only private sector organisations legally required to provide financial relief,” the council’s Victorian Executive director Danni Hunter said.
“Commercial property owners have supported and continue to support tenants to navigate the worst of the crisis.
“But landlords have their own financial pressures and obligations to meet and can’t be expected to continue providing rental relief indefinitely.”
Small Business Commissioner Judy O’Connell told The Age that businesses would have suffered more if not for the
“The Victorian Government’s Commercial Tenancy Relief Scheme has been instrumental in helping to reduce the financial pressure experienced by small business owners because of the pandemic,” Ms O’Connell said.
The state government has not responded to a request for comment.
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