Businesses collapse despite accessing COVID cash

Seven businesses which were collectively paid more than $1m in taxpayer-funded COVID loans have gone into liquidation, with fears they won’t be the last.

Seven businesses which secured $1.1m worth of taxpayer-funded COVID-19 loans have collapsed into liquidation, and the state’s auditor warns more could follow.

Concessional loans worth up to $250,000 have been provided over 10 years under the state government’s $1bn COVID-19 Jobs Support Loan Scheme.

The loans, with a fixed rate of 2.5 per cent, were launched by the Queensland Rural and Industry Development Authority to help businesses and non-profits maintain operations and employees through the pandemic.

Seven businesses which accessed a total of $1.1m through the scheme have collapsed, The Courier-Mail can reveal.

A QRIDA spokeswoman did not reveal the details of the businesses but said QRIDA would use insolvency laws to seek the loan repayment.

The number of collapses remains a small percentage of the 6298 businesses which secured government assistance loans.

About 88 per cent of those were small businesses with 20 or fewer employees.

Hospitality was the largest beneficiary of the program, receiving 441 loans totalling $63m.

As at January 31, 101 loans totalling $14m have been repaid.

A Queensland Audit Office report, however, notes about 277 more loans are at a “high or severe” risk of not being repaid.

The streamlined application and approval process, which Auditor-General Brendan Worrell noted was “not unusual” during times of disaster, has made it “difficult to estimate the ability of these businesses to repay the loans”.

“While QRIDA still applied eligibility criteria for the COVID-19 Jobs Support Loan Scheme, it had a greater tolerance than usual for applicants with a high risk of not being able to repay the loan,” he wrote.

“The impact of the COVID-19 pandemic on the future financial viability of the loan recipients is not yet known.”

No repayments are required in the first year, followed by two years of interest-only payments.

The loans scheme opened in late March, before the Commonwealth’s JobKeeper program – meaning businesses could double-dip on taxpayer support.

More than 86,000 Queenslanders kept their jobs through the loan program, the QRIDA spokeswoman said.

Originally published as Businesses collapse despite accessing COVID cash