With the new guidelines, salon owners will be able to keep control of their business and have 20 days to restructure their debts, aided by an independent practitioner.
Australian Small Business and Family Enterprise Ombudsman Kate Carnell said the insolvency changes would go a long way to helping small businesses survive the coronavirus pandemic.
“Small businesses were not getting the chance to turn their businesses around and were instead finding themselves on an express train to winding up with zero control over the process,” Ms Carnell said.
She said the changes would go a long way to fixing that problem.“Crucially, these measures give otherwise viable small businesses more time to recover, preventing a wave of unnecessary insolvencies.”
With regards to the manner in which the assistance would be rolled out to salon owners, Ms Carnell has suggested that all business owners considering insolvency will have access to a viability programme.
“Deloitte Access Economics modelling estimates about 240,000 small businesses are at risk of failure. This highlights the need for small businesses to sit down with their trusted financial adviser for a viability assessment,” she said, highlighting the benefit of a voucher system.
“The voucher would ensure small businesses have access to the expertise they need to judge business viability. Unfortunately, small businesses with cashflow issues, compounded by falling revenue, may not seek out professional advice because it’s deemed to be unaffordable. This could prove to be devastating for the business owner and their family. The sooner a small business owner experiencing financial stress seeks assistance from an accredited professional, the better the outcome.”
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