New law to provide timely relief for businesses
New insolvency laws are expected to give Sunshine Coast's struggling small businesses a lifeline while other government subsidies end or are scaled back.
The Federal Government has announced new insolvency laws that will apply to small businesses with debts of up to $1 million.
Under the new rules, the owner of a small business in financial distress can seek advice from an insolvency practitioner to develop a restructuring plan.
Noosa-based insolvency expert and liquidator Jarvis Archer said the policy would provide several important benefits to Sunshine Coast businesses.
"It should encourage small business owners to seek help earlier, result in better outcomes for businesses, their employees and creditors, and reduce the prevalence of phoenix activity," the Revive Financial partners said.
"Phoenix activity is generally conducted by unregulated advisers."
If the restructuring plan is approved, all unsecured creditors are bound by it and the business can continue to trade under what will be known as a "debtor in possession model", under the control of its owners.
Mr Jarvis said the laws would help provide some protection for business owners while other subsidies expired or were scaled back.
Relaxed insolvency laws which allowed businesses to trade without making a profit for six months ended this week.
Meanwhile JobKeeper 2.0 will be implemented from September 28, with the subsidy scaled back to $1200 a fortnight for full-time employees and $750 for employees who work less than 20 hours a week.
The JobSeeker payments will also be reduced on Monday.
Treasury data shows more than 57,000 Sunshine Coast workers are on JobKeeper and 32,000 on JobSeeker.
"Certain industries on the Sunshine Coast have been heavily impacted by COVID-19, such as those in tourism and hospitality," Mr Jarvis said.
"However, I have been speaking to many local accounting firms who report their clients are doing well.
"The key focus for these businesses now needs to be ensuring their ongoing viability once the Government support through JobKeeper and the Cash Flow Boost end shortly."