A massive 240,000 businesses are at high risk of failure when the Government’s COVID-19 stimulus finishes up in September, modelling from consultancy firm Deloitte has shown.
The firm says its analysis shows around 35% of businesses in NSW and Victoria are accessing the Government’s JobKeeper, with more than 30% in Tasmania and Queensland using the funds.
Those businesses most at risk are in the hospitality, professional services, and transport sectors.
Around 40% of businesses in these industries have revealed their cash reserves currently covers less than three months of operations.
“Some parts of Australia are likely to face higher risks than others,” the report reads.
“There are two reasons for this – the degree to which restrictions have hurt economic activity, and the state or territory’s exposure to high risk sectors.”
Deloitte warns this will result in higher prices and less innovation.
Meanwhile, larger businesses – with the available capital – will be well positioned to take advantage and increase their market share.
The same could well be said for the aged care sector. With the Government yet to announce if it will extend additional funding, the current stimulus package is due to expire in September.
As the latest StewartBrown report shows, 60% of aged care operators are now in the red.
Aged care is different in that it has a guaranteed source of funding – but you must ask the question: how many can say that they have three months of cash reserves in the bank?
With the relaxed rules about insolvency also due to end in September, the “cliff” is looming.
