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Labour promises to extend interest-free period for small business loans, regulate card transaction fees

Labour is promising to keep helping small businesses deal with economic impact of the Covid-19 pandemic, announcing new policies today.

Credit card payment (file picture). Source: istock.com

The party is promising to extend the small business cashflow scheme by three years and make the second year interest-free. They'll also regulate fees charged to retailers for debit and credit card transactions.

Currently, the small business cashflow loans are interest free if paid back within a year and will provide $10,000 to every firm, in addition to $1800 per equivalent full time employee. The passing of the law was the result of an administration error, Interest reported.

Applications are set to close for the scheme at the end of this year, however, should Labour be re-elected it promised to make it available for another three years and make the second year of the loan interest free as well. 

Small business spokesperson Stuart Nash said they would also investigate "more permanent sources of finance for SMEs". 

The party also pledged to tighten regulations to reduce merchant service fees, such as PayWave charges, that are charged to businesses by banks. 

"Retailers are estimated to pay on average $13,000 more than their Australian counterparts each year on merchant service fees," Nash said.

"This needs to change."

"The point where customers transact with businesses is a source of both health and economic concern. Contact-less payments give customers and businesses greater peace of mind as we all work to eliminate the virus."

Nash also said they would create a Digital Training Voucher worth $2,500 to cover costs of short digital training courses. 

At the end of May, the small business cashflow scheme had about 60,000 small to medium businesses take out the interest free loans, with $1 billion spent overall. That increased to $1.2 billion in June, as more than 70,000 businesses accessed the loans.