What disaster relief is there for small business?

Speaker 1:
Welcome to CPA Australia's With Interest podcast, bringing you this week's need to know information for businesses and accounting professionals.

Jane Rennie:
Hello and welcome to With Interest. I'm Dr. Jane Rennie, General Manager Media and Content at CPA Australia. In this podcast, we're going to discuss support for small businesses following natural disasters, severe storms, flood, bush fires, or landslides for example. Australia has had a difficult run of natural disasters in the last few years, and this shows no signs of slowing. Small businesses play a big role in many communities, especially in rural, regional and remote areas. And a quick recovery for affected businesses can help support the community's recovery more broadly. The Small Business Debt Helpline is a free service for small business owners in financial difficulties and plays a key role in supporting small businesses following disasters. Joining us from the helpline to talk about this, general manager, Helen Davis and financial counsellor, Sandra Blake. Helen, and Sandra, welcome to With Interest.

Helen Davis:
Thanks Jane.

Jane Rennie:
Helen, by way of background, can you tell me a bit about the small business debt helpline and specifically the role it plays following disasters?

Helen Davis:
Certainly, originally we were established following the horrendous bush fires during the summer of 2019 20. It'd be fair to say that we very quickly evolved to supporting small businesses impacted by a range of disasters. We can think of disasters as something that are really widespread. So we've seen businesses impacted by COVID, floods, storms, drought, mice plagues. We also work with small business owners who are impacted by disasters that are much closer to home. So you can think of things like a family illness or an accident or even a relationship breakdown.

Jane Rennie:
And Helen, are you a government body?

Helen Davis:
We're not a government body. We are funded by the federal government. We're operated by financial counselling Australia. Financial Counselling Australia was the peak body for financial counsellors and a not-for-profit organisation.

Jane Rennie:
And tell me, following a disaster how quickly the calls start to roll into the help line.

Helen Davis:
So we see quite a pattern following the big types of disasters. Fairly immediately afterwards we see a spike in calls and it's people very much calling originally to see is there a grant, is there some money that's going to tide me over. What we then see several months later is people calling where there's the ongoing impact of the disaster. So at that point they're really struggling to service their debts. They're probably in some instances facing supply chain issues. So a much more complex and deep seated type of issue. And then we'll work with them. So there's quite a long tail following a disaster. Two in the calls that we see. And one of the common things we see from people is that the situation is overwhelming them and are financially and emotionally drained at the point they're calling.

Jane Rennie:
Helen, are counsellors available to speak with callers in that immediate aftermath of the disaster?

Helen Davis:
Yes, they are. So the way our helpline is set up, we have a team of financial counsellors on staff and they answer the phone directly. So when someone calls us, their call will be picked up by their financial counsellor if you can work with them. We also have a web chat function. So the same thing if someone chats using that function on the website, they'll be chatting directly with a financial counsellor.

Jane Rennie:
Who are the financial counsellors? Are they financial planners in their ordinary life or are they accountants or are they lawyers?

Helen Davis:
No, no, they're not financial planners. Financial counsellors is a profession in their own right. So our financial counsellors have a diploma of financial counselling. The financial counsellors on our team all specialise in small business and many of them also have lived experience as a small business operator.

Jane Rennie:
Sandra, as a financial counsellor yourself, who takes these calls, what sort of a difference can getting quick access to this advice make in the aftermath of a disaster?

Sandra Blake:
There are more options if you act early, so the soon as somebody reaches out for that assistance, it will be better for them. I sometimes tell our callers that there are always options, and sometimes it may seem those options are bad options and worse options, but the sooner they reach out, the more pathways out of their current debt despair will be available to them.

Jane Rennie:
Helen, just in terms of businesses reaching out for help, are all types of businesses eligible to call you?

Helen Davis:
It's a really wide variety of businesses that we see. To be eligible to access our service they need to be an Australian business and have less than 100 employees. So that's quite a broad range of businesses. In our experience, the vast majority of people calling us are very small businesses. So typically it's less than five employees and very often it's a self-employed person where they're the only person working in their business. We see small business operators working with a wide variety of structures, so sole traders, companies, partnerships, trusts. We've even seen a few community co-op type of scenarios. And the other thing is we see businesses from all industries in all locations.

Jane Rennie:
Do they have to have been directly affected or can they be indirectly affected by the disaster?

Helen Davis:
No, they don't have to have been directly affected. So we see examples where people, for example, their business premises might have been impacted by flooding. But we'll also have people calling us where their clients have been impacted by that flooding and say they're a landscaper so they no longer have income, or it might be an indirect impact because the supply chain's been disrupted.

Jane Rennie:
Do you sometimes get referrals from other sources like someone's, I don't know, their GP or their accountant?

Helen Davis:
We do and referrals form a fairly high degree of the number of people contacting us. So we'll get referrals from people like the ATO or lenders, you mentioned GPs, we'll see referrals there where there's very much a nexus between someone's financial wellbeing and their mental wellbeing. We'll also get referrals from accountants and sometimes bookkeepers. So where they're recognising that their clients are struggling, they're perhaps having difficulty paying their accounting bills, those sorts of things. So they'll refer them through for support.

Jane Rennie:
Sandra, we've heard that the nature of the calls changes over time. Can you give us a few real life examples of questions that people might ask when they call you and what business owners are going through in the aftermath of the disaster?

Sandra Blake:
Yes. So when they initially call us, they're very confused quite often, and they're overwhelmed. Like what are they going to do first? There's so much happening and there are many examples. One that comes to mind was a farmer who was impacted for many years by drought and she had tried to arrange hardship with her bank for her bank loan, but didn't get very far with that. The bank had declined her request for hardship. So she had got a job off farm and that kept her afloat during the drought and she was able to keep up with those payments. And then along came the bush fires and her farm was greatly impacted by bush fire, all but 50 acres of her farm was burnt and she actually fought that fire herself. And that was great, she managed to save her house and her machinery shed, they were insured. Everything that wasn't insured was burnt. Her fences, her other shedding, a tractor, her herd of cows was burnt. So her accountant referred her to us and he did that to help find a grant so we could go through the maze of grants that come out after natural disasters, what is going to be available to who, what are you going to be applicable for and what are you going to waste your time applying for? Due to her off farm income, she wasn't eligible for quite a few grants or concession or loans. We then have a deeper conversation when I asked, "How are you coping? What's going on?" And we then talked about her mental health and she said to me that while she was fighting the fire, she'd had a fall and she'd broken her front teeth, but she couldn't afford to go to the dentist. So this was an immediate need that she had. She was in a lot of pain and causing a lot of stress. We were able to source free dental care for her. And with that sorted, she was then able to think about, well, what comes next? And then we were able to organise hardship from a bank where she wasn't able to, go to some ongoing mental health care as well.

Jane Rennie:
Sandra, you mentioned the word confusion there and that came to mind earlier when I did a quick Google search for disaster support. There's a huge amount of material out there, which is great in one sense, but I imagine it can also be quite confusing for business owners. How do you suggest they cut through the noise to get the support they need? Helen, I might throw that one to you.

Helen Davis:
You're right, Jane, it can be very overwhelming for people. They're in pretty distressing circumstances. And then there's this maze of what may or may not be available to them. The key thing is they do reach out for support. Often people think of support might be in the form of a grant or as Sandra's just spoken through, it can be in all sorts of forms. So it could be a programme like ours, it could be working with a financial counsellor. It might be a programme like the Beyond Blue New Access for Small Business Owners. If people reach out for support, a great place to start is somewhere like our service. Or if their community's got a local disaster hub, that's a good place to start because we can then work with them to find out what's applicable in their circumstances, what are their priorities, and match them with what's available and help them through that process. Particularly in the case of people operating a small business, be very wary of making a business decision in haste. So often we see people who've been in really desperate situations and they've made a quick decision. And the old adage of if something's too good to be true, it probably is comes to mind. So unfortunately we've seen people who've been a victim of a scam, or even if it's not a scam, they might have signed up to something that they think, oh, this is just going to be short term. I'll only have to do it for a couple of months and then they end up with a long term problem.

Jane Rennie:
Because there is free and low cost support available, isn't there, Helen?

Helen Davis:
Absolutely. So our service is free. The other thing with our service is it's confidential, which is really important to small business owners. Sometimes we see them a bit reluctant to reach out for help. And one of the things our concerned about is what if people know my small business is struggling? For example, would I lose access to credit with my suppliers? So knowing that free help's available and it's confidential is very important.

Jane Rennie:
Sandra, I'd like to go through a couple of common scenarios with you and if you could let me know what sort of advice you might focus on if you had a caller asking this. So to start with, say I'm a small business owner, I've just been affected by a disaster. There are 100s of things I need to do. I'm feeling incredibly overwhelmed trying to figure out what actually I should do first. Where do I start?

Sandra Blake:
We look at priorities. So what is your most important issue? Maslow's Hierarchy of needs comes to mind. Shelter and safety are always a priority. Know are you safe? Are your family safe? Then is your business shut? No. Are you planning an insurance claim? If you are, you'll be taking photos. What stock is lost? Or what can be salvaged? Do you need to advise key business stakeholders that you currently closed of your current situation? There might be planned deliveries that you can no longer receive. Can they be cancelled? Communicate with the client's, cancel orders, what government help is being offered. We can go through all this, reaching out to a service like ours. We're really keeping up with what's being offered when and who it applies to. And we can sort through all that for you.

Jane Rennie:
Let me give you another scenario. It's days after the crisis. I'm absolutely stressed to the max. I'm exhausted. I'm feeling desperate. I've got repair bills coming out of my ears. Someone approaches me with a quick offer of financial assistance. It sounds great, but I'm not sure of the terms and conditions. Should I just go ahead and take it?

Sandra Blake:
Take a breather there and we can have a look at the contract if you're unsure about it. Helen just mentioned making a decision in haste might solve the problem this week. It might help you to pay your staff this week or to keep the power on, but it might cause a longer term problem. Some we see egregious terms from [inaudible 00:13:52] and lenders, sometimes our callers have reached out to their mainstream lenders for assistance and they've been declined and possibly that's been for good reason. So then they've searched for a second or third tier lender. And those terms and conditions come at a price. And if you are unable to meet a repayment one week, you are really going to be hit hard with fees and the protections aren't there that apply to consumers in that situation. So it can really be difficult. We sometimes also have people with a company who don't understand the effect of a personal guarantee. So lenders are going to want to have a personal guarantee. So suddenly you might have your house at risk. They might have a caveat on your house or the family car. We can go through, just check, see what's what this loan might mean to you and talk about other options. Can we get a stay on proceedings perhaps from your creditor? Can we organise some type of hardship arrangement?

Jane Rennie:
And then of course, I guess there are just the flat out scams. Am I right in thinking scams come out of the woodworks after disasters and people might not realise, but it's a scammer trying to make a quick buck off their tragedy?

Sandra Blake:
Yeah, look, if it sounds too good to be true, it probably is. Scams are continuing to rise and they're getting smarter. I spoke to a gentleman last week who phoned up and he told me that he actually had a job of educating people to be aware of scams and he had been scammed and he felt very embarrassed about that. But it's just so easy to make those hasty choices when your mind is very confused and overwhelmed and you're tired. If you've been through a lot of trauma, a lot of disaster or illness, whatever it is, that's put you in this financial situation. I can see how these decisions can be made. So the common types of scams is the false billing. There's overpayment, there's investment scams, we see them all. So it's really limiting who's got access to your own financial records. And if something looks just a little bit suspicious, contact that supplier or whoever's asking for the money just to check that it really is an account from them.

Jane Rennie:
Now, what should I do if I'm a business who can't afford to pay for some of the services that I do need to help me recover? For example, what if I can't afford my accountants bill?

Sandra Blake:
Communicate. So communicate with your accountant in this situation. Perhaps you can offer to pay something now, more later. We would also talk to you about your own business viability and we've got some business viability tools that we can use. Or perhaps we could refer onto a free business advisor or mentor. There's also university tax clinics and they might be really helpful, if you can't afford to be paying your accountant might right now, you could use the university tax clinics and they've been able to assist with tax returns or negotiating with the ATO.

Jane Rennie:
Just on that, Sandra, what if I do have an ATO debt that I can't pay? What should I do?

Sandra Blake:
Again, communication is key. The ATO we've found are very helpful if you keep that line of communication open. One of the problems that we find is that the small business owner might feel pressured into accepting a repayment arrangement from the ATO that is neither affordable or sustainable in the long term. And they'll miss a payment, they'll miss a next payment, and it doesn't help them. It puts them further back. So we're able to help them negotiate or help them go through their finances initially to work at what would be a sustainable amount to offer to the ATO, and then to help negotiate that payment arrangement and lock in a plan that is going to see them through to be able to pay that off. And sometimes they can't. And so we talk about that too. We talk about respectful exits. Sometimes the business is not going to survive. So we look at what's going to be next. How can this person walk away from their business with their head held high? And it might be retirement, it might be retraining. We know that there are many employers out there looking for staff, and a lot of our people would be most valuable to them. Perhaps it's relocating or reinventing their business. So we talk through where they might see themselves in a couple of years time. How can they exit that business respectfully if that's what they need to do.

Jane Rennie:
Helen, do you ever encounter reluctance from business owners to seek help?

Helen Davis:
We do. One thing I'd encourage people when they're thinking about reaching out to support is remember that a healthy local community relies on having healthy, small businesses. So if you're reluctant to reach out for help because you think there's someone more needy than me, or in a worse off scenario, just remember that by reaching out, you're helping yourself, you're helping your family, you're helping your local community. The other reason is the one I mentioned before around people being concerned about someone knowing their business is struggling. So a service like ours, it's free, it's confidential, and it's also not judgmental. So overwhelmingly the feedback we get from callers is how much they just appreciated having a listening ear, being able to talk through with someone like Sandra as a sounding board to get that objective impartial perspective, it's confidential and it just helps share the burden.

Jane Rennie:
And Sandra, am I right in thinking that you would've heard from callers who are experiencing a high level of distress and you won't be phased by receiving those calls?

Sandra Blake:
No. We sometimes do speak to clients who are feeling suicidal in fact. We're not therapeutic counsellors, but we have had mental health, first aid training. We can stay with that caller if they want to be transferred to Lifeline. And we can stay on that call if that's what they want. Or sometimes just a chat is enough to get them over that current feeling. We'll speak later in the day, perhaps refer to their GP so we can refer on to other services if need be.

Jane Rennie:
That's all we've got time for today. Thanks very much to our guest experts, Helen Davis and Sandra Blake from the Small Business Debt Helpline. The Help Lines phone number is 1800-413-828. A link to the disaster relief page of the Small Business Debt Helpline website is included in our show notes. Also in the show notes is a link to CPA Australia's disaster recovery toolkit, which includes checklists of actions to support small business debt recovery. A linked to the Beyond Blue New Access for Small Business programme, which was mentioned earlier, is also included. If you are experiencing distress and require crisis support, Lifelines number is 1 3 1 1 1 4. That's 1 3 1 1 1 4. With Interest is a weekly podcast. If you like what you've heard today, why not subscribe and that way you'll receive notifications when new episodes become available. From all of us here at CPA Australia, thanks for listening.

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