Banks ready to fill JobKeeper gap

Australian banks have pledged to fill the cash void of businesses awaiting the government’s planned JobKeeper wages subsidy.

Businesses struggling to pay employees while awaiting the first JobKeeper subsidy payment on May 1 have been offered a lifeline by the banks, which have pledged to provide financing to get them through the next few weeks.

“Banks stand shoulder to shoulder with the Australian government and businesses across the country to help us emerge on the other side of this crisis strong and ready to rebuild,” Australian Banking Association CEO Anna Bligh said on Sunday.

“As many businesses face a number of weeks of little or no cash flow before they receive payments under the government’s JobKeeper program, Australian banks may be able to help.”

Under the JobKeeper payment program, businesses hit by the coronavirus will be able to access a subsidy from the government to continue paying their employees.

Affected employers will be able to claim a fortnightly payment of $1500 per eligible employee for six months.

Employers with a turnover of less than $1bn will be eligible for the subsidy if their turnover falls by more than 30 per cent, while businesses with a turnover of more than $1bn will be allowed to claim the subsidy if their turnover drops by more than 50 per cent.

Hundreds of thousands of businesses have already registered for the subsidy since it was announced last week.

While the program is aimed at keeping employees and employers linked through the crisis, economists have warned April will be a dangerous month, with many businesses at risk of going under before the May 1 payment.

An emergency session of parliament is scheduled for Wednesday so the government can pass the JobKeeper legislation.

Businesses may be able to use the proposed JobKeeper program payment as a basis to seek credit to pay their employees until the scheme makes its first payments, the ABA said.

“Many businesses may be eligible for credit, for example, an extension to their overdraft, which can offer them cashflow to pay their staff, while they wait for the JobKeeper program to make the first payments,” Ms Bligh said.

The government’s $130bn JobKeeper program is part of a broader survival package aimed at keeping businesses and households afloat through the COVID-19 pandemic.