Tight eligibility criteria could exclude small businesses from Victoria’s lockdown payments

Eligibility criteria for the Victorian government’s Business Support Package could exclude SMEs that have been forced to stand down staff without pay, or those that have remained partially open.

Applications are open for up to $7,000 in grant funding for businesses affected by the latest COVID-19 snap lockdown. However, accounting body CPA Australia has raised concerns over which businesses will be eligible, and which will not.

First and foremost, the Business Costs Assistance Program requires applicants to be registered for Goods and Services Tax as of Thursday, 27 May.

“Requiring applicants to be registered for GST excludes some small businesses such as performers who haven’t registered but can no longer work,” Gavin Ord, senior manager for business and investment policy at CPA Australia, tells SmartCompany.

However, under the eligibility criteria for both the assistance program and the Licensed Hospitality Venue Fund, businesses with employees must also show they are offering paid leave to workers.

The Business Victoria page relating to the package states that the grant funding can be used to assist with meeting utilities, wages or rent; seeking financial and legal advice; marketing and communications activities; and other supporting business activities.

However, it also says: “The applicant must attest that the business is supporting its workers to access any paid leave entitlements, or that if a person can work from home, to work from home during the circuit breaker action, and supporting their casual workers, where possible.”

This suggests businesses that have stood down staff members without pay may not be entitled to the funding.

But, “the attestation requirements regarding support for workers are unclear,” Ord notes.

This could mean businesses that were forced to stand down workers immediately find themselves ineligible for support.

Finally, in their application, businesses are required to show they meet the eligibility criteria, and attest they “intend to remain trading at the end of the circuit breaker action”.

This places unfair pressure on businesses already facing considerable uncertainty.

“On the face of it, a business owner who isn’t sure they’ll be able to continue trading after the lockdown ends can’t apply,” Ord observes.

Arguably, it should go without saying that business owners want to stay in business. But, this begs the question as to what happens if they receive grant funding, but still can’t survive.

Confusion and contradiction

There is also a question mark over whether a business that hasn’t been forced to close because of the snap lockdown, but has lost income because of it, is eligible for the grant funding.

One section of the FAQ regarding the Business Costs Assistance Program states that businesses in eligible sectors that are continuing to operate but are “unable to carry out their usual business activity” can apply for the grant and “may be eligible”.

The document cites retailers switching to click-and-collect and restaurants offering takeaway as examples.

However, another section says: “Businesses that are continuing to operate or can work from home during restrictions are not able to apply.”

It goes on to list examples including essential retail and professional services as examples.

“Businesses that are allowed to remain open may nonetheless experience significant losses because of the lockdown,” Ord says.

“They should be eligible to apply for the grant.”

But the very fact that there’s any confusion or contradiction here is troubling in itself.

When the lockdown period is so short, affected businesses need to know whether or not the eligibility criteria apply to them as quickly as possible. That means the rules need to be easy to understand.

“It’s disappointing that feedback isn’t being taken on board to improve programs such as this, especially given the likelihood they’ll be needed again in future,” Ord says.

A litany of errors

This isn’t the first time Victoria’s state government grants programs have been criticised.

In April this year, a report from the Victorian Ombudsman Deborah Glass found the state government may have unfairly rejected COVID-19 grant applications from more than 12,000 businesses.

Applications were rejected because of typing errors, missed emails and other honest mistakes, the report found.

And while some businesses have since received the funds they’re entitled to, others say they’re still waiting.

SmartCompany has also received reports of business owners who have not received funding promised from the five-day lockdown in February 2021.

Has your business missed out on state government grant funding due to strict eligibility criteria? Are you still waiting on support? Let us know in the comments.