QUIZ Small Business and Bushfires

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* 1. Following the 2019-2020 bushfires, the Commonwealth Government announced a range of measures to assist affected small businesses. These include:

Grants of up to $50,000 for small businesses to clean up and reinstate their businesses

Concessional loans of up to $50,000 for working capital and up to $500,000 for recovery

A Small Business Financial Counselling Support Line to provide free financial counselling advice over the phone to small business

All of the above

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* 2. Your client, Joe, has a small business on the NSW South Coast that was damaged by the bushfires. He has put in an insurance claim to replace damaged stock and equipment. The assessor has visited the premises but your client is getting frustrated. Each time he calls the insurance company they say there is a backlog and they have declared a catastrophe. What is your advice for the best next step your client should take?:

Tell the insurer (preferably in writing) that Joe is making a complaint about the delay and wants a response. You explain that the insurer then has 45 days to respond and if the dispute remains unresolved, Joe can then lodge in AFCA.

Explain that because the Insurance Council of Australia has declared a catastrophe you just have to wait and it could take years.

Just lodge a dispute in AFCA and don’t bother to give the insurer a chance to respond.

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* 3. Your client, Nok, has a small business (as a sole trader) in South Australia making Thai jewellery. Her small shop was not damaged in the bushfires but it was a close call. The problem now is that Nok has so few customers that she believes she may need to permanently close her business. The only debt that is a problem is for her quarterly “Pay as you Go” tax instalments. What do you say to Nok?:

You don’t give tax advice as that is illegal.

Tell Nok that there is an automatic deferral available for tax payable by small business affected by bushfires. You give the website details at https://www.ato.gov.au/Individuals/Dealing-with-disasters/In-detail/Specific-disasters/Bushfires-2019-20/. You also explain that the ATO can also make other arrangements if the deferral is not enough time.

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* 4. May has a small business in a bushfire affected area in Victoria. Tragically, May’s husband, was killed in the bushfires. When May sees you, she is distraught. May has come to see you with her friend Lucy. Lucy tells you that May is not paying her home loan and explains that May cannot face making a call to the bank to explain. Lucy says that a friend recommended May see a financial counsellor. What do you do?:

You use a trauma informed approach and give reassurance about the strength to get to this appointment

Make sure both May and Lucy know about support available for bushfire trauma. You refer to Beyond Blue and a GP for free access to a psychologist

Explain that the banks have committed to assistance for people affected by the bushfires. You reassure May that once you contact the bank as her representative you are confident of a compassionate response. You then seek more information so you can contact the bank.

All of the above

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* 5. Your client is a sole trader, Jenny who runs a small business in rural Western Australia. Before the bushfires Jenny had a small overdraft facility of $10,000 with the bank. Jenny’s business was struggling and the bank had decided to demand payment of the overdraft in full. The bank had sent a default notice. Before Jenny could do anything about the overdraft problem, a bushfire ripped through her town. Jenny has spent the last few weeks helping to rebuild the town. Jenny is now in further financial difficulty as she stopped trading to help. She finally finds a moment to see you. What do you say?:

You explain that under the Banking Code of Practice, the bank must give 30 days’ notice before beginning enforcement on the overdraft (chapter 21). So, the notice that was sent is important. Let’s call the bank and explain what has happened and we can ask for further time. Then we can work on her financial difficulty.

The bank would not dare to start enforcement after the bushfires so she should just keep helping people.

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* 6. You are contacted by Tim over the phone for advice. Tim runs a small business that is in serious financial difficulty due to the bushfires. He says it is probably now insolvent. He noticed an ad for a firm that will save his business by liquidating it and then starting a new business. He says it is a special deal from the Government for small business impacted by bushfires. What do you say?:

I can’t give you advice on business insolvency.

That could be a Part X of the Bankruptcy Act. You need to shop around.

Beware of businesses that make offers after a catastrophe. If it “too good to be true” it may be a scam. Check ScamWatch and talk to your accountant. Also, I can’t give advice on business insolvency.

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* 7. Bud’s apple orchard in rural NSW burned down in the bushfires. Most of the apple trees cannot be saved. Bud is very upset. A man knocked on Bud’s door about a week after the bushfire offering to repair equipment on his farm for free and help him with his insurance claim. Bud was pretty impressed about all this free help until the man produced a contract for him to sign. What is going on here?:

The man is likely to be a “storm chaser”. These are businesses or people who turn up after a natural disaster who promise help but are actually looking to make a buck. You explain this to Bud and explain he can make an insurance claim for free and should not sign the contract.

You tell Bud how impressed you are about the people who come to help after a bushfire!

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* 8. Your client, Sid, is a small business that has been severely affected by the bushfires. A lot of his shop is damaged. He was uninsured as he could never afford the premiums. He is devastated. He now has a business that is not trading and his debts are starting to mount. What are some good options for Sid to consider?:

Emergency relief, could apply for a Government grant but needs to think about if it is realistic to rebuild, access to donations, assistance with making repayment arrangements with creditors, apply for Centrelink.

Part IX with personal creditors, give up and close the business and sell home.

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* 9. Gigi and Rob own a farm in rural NSW. Their house did not burn down but their water tanks and fences were destroyed by the bushfires. The insurer will not send an assessor and tells them to get 3 quotes and they will pay. Gigi and Rob find they can only get one quote and everyone else refused as they were too far away. The insurer has said they will wait till they get the other 3 quotes. Rob and Gigi need the fences and water tanks urgently. They see you and you say:

You really need to get those two quotes asap

Just repair them and bill the insurer. They will definitely have to pay.

Lodge a complaint in Internal Dispute Resolution of the insurer, mark it as urgent and insist on resolving the situation due to ongoing harm. Consider lodging in AFCA urgently.

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* 10. A small business owner, Ti, comes to see you. He has lost all his business financial documents in the bushfires. He now does not know what to do. You say:

That is awful. Do you have a back-up?

A lot of the financial information can be replaced. The ATO has agreed to provide historical copies of tax returns for free; the Insurance Council of Australia can help you find your insurance policy; your accountant may be able to help with other financial records.