Closing the SME revenue gap
Key findings
- Around 40% of small and medium enterprises (SMEs) received JobKeeper payments in April and May.
- The payments appear to have been well targeted, largely going to businesses whose revenues had fallen substantially in comparison to their peers, and which operate in severely affected sectors of the economy.
- They have provided a sizeable boost to the financial health of recipients, lifting cash inflows by 15–20%.
- However, sole traders and partnerships are notably less likely to have received payments than companies, raising concerns that some businesses may have missed out.
Unprecedented not only in its size and scope, but also in the speed with which it has been deployed, JobKeeper is truly a landmark policy initiative. As at 20 May 2020, just six weeks after JobKeeper was first legislated, 759,654 businesses had made claims under the program, generating $8.7 billion in approved payments¹. But has the program been successful in supporting the small businesses most severely impacted by the COVID-19 pandemic?
To find out, we analysed data from the GetCapital SME Sales Index for a critical 18-week period, during which the COVID-19 lockdown was introduced and JobKeeper rolled out. Based on daily transaction data from a representative sample of 4,000 businesses, the Index tracks changes in sales revenue for small and medium enterprises (SMEs) around Australia. Here’s what we found.
Making a real difference for SMEs
Right on target
Closing the revenue gap
Collectively, JobKeeper recipients experienced a 46% decline in revenue between February and April, compared to a decline of just 15% among other businesses. And while revenues for JobKeeper recipients have recovered from their lows, they are still around 30% below pre-pandemic levels, suggesting that the program continues to provide valuable support.
Our data also shows JobKeeper has made a significant difference to the health of recipient businesses. Adding JobKeeper payments to sales revenues, we find that the program has boosted cash inflows by around 15–20%, to as much as 95% of the recipient’s previous revenue – enough to more than close the gap between JobKeeper recipients and others.
Recreation, manufacturing and hospitality the largest beneficiaries
Uneven impact
Interestingly, around 40% of Construction businesses have also made successful JobKeeper claims, with cautious clients putting projects on hold, despite the sector’s status as an essential service. That’s around the same proportion as Retail Trade – further confirmation that retailers have weathered the crisis better than expected.
Comparing businesses in the regions to those in metropolitan centres, we find that metro businesses were around seven percentage points more likely to claim JobKeeper than their regional peers. As well as providing welcome evidence that the impact in the regions was less severe than originally feared, this reflects the higher concentration of Accommodation and Food Services businesses in metropolitan areas, and of Transport businesses in the regions.
Less easily explained is the 11 percentage point gap between incorporated businesses, 45% of which have claimed JobKeeper, and partnerships and sole traders, only 34% of which have done so. While some smaller businesses run by sole traders may have proven unexpectedly resilient during the crisis, this finding does raise the possibility that some sole traders may have been unsuccessful in accessing JobKeeper payments or unaware that they could do so – suggesting there may be one aspect of the program that could potentially be improved.
About the data
