Fintechs are being disproportionately affected by the COVID-19 pandemic, with many not meeting the criteria for government assistance now facing the prospect of laying off staff and potentially closing up shop.
At issue is the government’s wage subsidy, which is “inadequate” to meet the needs of fintechs and start-ups.
“The wage subsidy’s requirement that turnover fall by at least 30 percent from March 2019 means that high-growth fintechs, or those that have not been commercialized for 12 months, may not be eligible for the wage subsidy,” FinTech Australia wrote in a statement. submission to the Senate. “In a high-growth business, a 30 percent reduction in revenue is more than 30 percent.”
FinTech Australia, which represents more than 300 Australian start-ups and fintechs, suggests the use of bridging financing linked to a two-year repayment period and conditional on the fact that companies do not lay off employees, as well as the anticipation of government R&D incentive payments.
“The time to act now is now to avoid an irreversible market shock to the fintech sector,” FinTech Australia wrote. “Anything the government can do to maintain confidence, support investment and maintain jobs in the fintech sector during the crisis is essential to maintaining the upward trajectory of increased competition in the banking sector. »
FinTech Australia gave a number of examples of businesses that did not meet the grant criteria, including a business employing 160 people that may not be eligible because it was not in business 12 months ago. The company has asked all staff to take a 20 percent pay cut to minimize layoffs in the short term. Another member – an enterprise software company that generates revenue through annual licensing deals – expects to see revenue decline unevenly throughout the year, making it harder to apply for grant.
“Australia will not be the first to take such steps,” said Rebecca Schot-Guppy, chief executive of FinTech Australia. “We are suggesting measures that have been taken in the UK and Singapore. We welcome a full discussion with the Government on how to ensure fintech and other innovative industries contribute to Australia’s economic recovery and also create jobs for more Australians.
