Lending a hand: Advisors, here’s how to help with COVID-19 loans

Over the past few months, businesses across Australia have been faced with a challenge like no other. As they navigate their way through the economic fallout of the COVID-19 crisis, many are finding that accessing working capital is proving increasingly difficult. While bridging the gap between JobKeeper payments when revenue has all but dried up poses yet another hurdle.

Luckily, there’s some relief to be found in the form of the government’s Coronavirus SME Guarantee Scheme. Designed to help small businesses with timely access to capital so they can make it through the impacts of the pandemic, the scheme will support up to $40 billion of lending. Now more than ever, small businesses are looking for guidance on how to navigate the subtleties of their set up and determine eligibility.

As trusted advisors, accountants and bookkeepers are in the perfect position to lead the charge. To support our partners in this process, as part of our Lending a hand series, the Xero team reached out to leading banks and lenders to discover their advice for advisors helping small businesses with Coronavirus SME Guarantee Scheme applications. Read on to discover some of their top tips (and be sure to watch the short videos for further advice and insights).

1. First, consider whether a loan is the best option for your client.

“This is a challenging time, and it’s important that a business doesn’t look to over extend itself with debt. What an advisor should really be doing is actually making sure that this loan is the right solution for their client.” 

Frank Sterle, COO, GetCapital

2. Make sure you do your homework.

“The role of the advisor is more important than ever. My tip for helping with small business loan applications: do your homework. This means understanding what information is required and figuring out what you need to do to provide it.”

Aris Allegos, CEO and Co-Founder, Moula

3. Determine whether your client needs the loan for business purposes.

“Advisors should make sure they spend time with their client so they can understand what their need for the loan is. Businesses owners will need to demonstrate that the loan will be used to support current and upcoming working capital needs – this includes short term operating expenses, such as rent, wages and stock, etc. In this instance, it’s really important that the nature of the loan is for business purposes only.”

 Andy Kerr, EGM Business Customer Solutions, NAB

4. Help get your client’s financial information up to speed.

“Accountants and bookkeepers play a great advisory role in directing people to the different lending solutions that are available. My tip is to get clients’ financial statements for FY19 finalised, as well as management accounts from as recently as possible in order to help with some of the serviceability assessment we’ll need to do of their pre-COVID-19 position.”

Andrew Smith, Head of Business Banking, Bendigo Bank

5. Ensure your client has the details they need to be loan-ready.

“To ensure your client gets cash into their account quickly, make sure they have the required information ready for their application. These documents may include personal ID, annual financial statements, and interim financial statements, bank statements, tax returns, BAS statements, and details of business expenses.”

Chris Brell, State General Manager NSW/ACT, Westpac

For any advisors who are feeling unsure of where the line is when it comes to helping clients but stopping short of providing financial advice; Xero has created this Demystifying business finance – What is it and what can you say video in partnership with CPA Australia. In addition, Xero Central is packed full of insights into accessing business finance – all so you can help your small business clients figure out what’s right for them.

From webinars to video series and blog posts – the Xero team has created a number of free educational resources (with more to come) on financial support and business loans to help our small business and partner communities make it through this challenging period.