With growing concerns for the post-coronavirus hospitality industry with concerns many SMEs in the sector will not be able to access bank finance, the Night Time Industries Association (NTIA) is calling on the NSW Government to fund emergency loans.

The SME independent hospitality scene has been particularly impacted by COVID-19 through the lockdown and social distancing measures, which have seen the industry closed overnight. This has left businesses without a business and while the Government has introduced measures like the Job Keepers package, there are concerns that many hospitality operators in NSW will not survive the crisis.

NTIA Chair, Michael Rodrigues, said: “The Commonwealth has announced a package of loan guarantees for SMEs, which we have welcomed. However, while the scheme is well-meaning, our members report that a large majority cannot access finance through it to keep them afloat during the lockdown period.

“We know that Governments at all levels value this sector and are trying to support it. However, for the reasons identified here, many of these businesses are going to slip through the cracks of the Government support plan unless urgent action is taken. Many of these businesses are small operators, but represent a diverse and innovative hospitality experience, much of which is unique to Sydney and NSW.

“If we lose them now, they are unlikely to return. We would like to work constructively with you to avert wholescale business closures and job losses within the hospitality sector in NSW. The loss we are about to experience is due to a problem in execution, not intention, and is avoidable.

“The core issue this report illustrates is that this category of businesses cannot access bank finance and so we urge the NSW Government to provide emergency loans as other states in the country have done.”

In Queensland the Government has allocated $500m for low interest, long repayment loans of up to $250,000 to eligible businesses to help with immediate cash flow issues. The loans have no repayments or interest charged for the first year, plus an extra two years of interest only payments. They are also locked in at 2.5 per cent fixed interest for the 10-year term of the loan.

While the Job Keeper program does technically offer businesses support in paying employees, there is no material cash flow benefit as the scheme works in arrears and implementation does add some additional financial burden to the business.

With many hospitality businesses in NSW already suffering a financial impact from the bushfires, followed by the lockdown, this additional burden, without Government assistance is likely to be too much and will see them having to close.

The NTIA said that Government funding would give businesses immediate access to enough cash would enable these businesses to:

  1. utilise the JobKeeper program and reinstate employees – even if in hibernation;
  2. pay business costs other than employee costs – even if in hibernation;
  3. stay alive during the mandated shutdown; and
  4. permit a higher rate of sector recovery improving Sydney and NSW competitiveness in terms of visitor and tourism economy.

The NTIA said that not one respondent to its survey had been able to access commercial loans from banks under the Morrison Loan Guarantee Scheme and that one non-bank financial institution had specifically excluded hospitality as a sector in respect of which applications can be made.

Andy Young

Andy joined Intermedia as Editor of The Shout in 2015, writing news on a daily basis and also writing features for National Liquor News. Now Managing Editor of both The Shout and Bars and Clubs.

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