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Regulatory Roundup – December 2014
PayPal chases small business finance market
PayPal has launched its “Working Capital” loan product, which allows small businesses to access cash loans through their PayPal account. The company has about 110,000 merchants using its payments platform in Australia, and estimates the market for its product is about 30% of its small business customers, or about 33,000.
Small businesses will be able to borrow up to 8% of the sum of their yearly PayPal transactions (up to $20,000). Repayments are decided upon by the business owner when they make a sale, but are between 10% and 30% of the loan size.
PayPal said Australia is one of its largest small business markets, and is one of the first countries outside the US to get the new finance product.
Giving PayPal merchants the flexibility to pay when they get paid, Working Capital uses a business’s transaction history and performance to determine lending eligibility before allowing small businesses to access capital.
PayPal however emphasises that it is not a start-up facility. To access the loans, merchants need to be a PayPal user with a solid trading history for about a year, which is part of what the company sees as its advantage.
Grants for manufacturing ventures
Are you planning to set up or expand a high value manufacturing business in South Australia or Victoria? You may be eligible for a grant under the new $60 million Next Generation Manufacturing Investment Program.
The program is a joint initiative between the federal government and the Victorian and South Australian state governments. It is part of the Australian Government’s $155 million Growth Fund to drive the development of new industries in high growth sectors in South Australia and Victoria.
The grants support capital investment projects in areas of high-value manufacturing. Features of the grants are that they:
Resilience of SME sector evident over past five years: Report
A recent report has underscored the “remarkable resilience” of the SME sector through the last five years, battling the aftermath of the global financial crisis and subsequent international downturn to remain remarkably upbeat.
The Five Year MYOB Business Monitor Report, which canvasses the biannual national survey of more than 1,000 SME operators over the five years from July 2009, also highlighted that the number of businesses in Australia has grown 1.4 to 1.9 million enterprises.
The increase in the number of businesses in Australia has come despite a relatively flat period of revenue growth for the nation’s SME sector, the report said. However, the revenue gap has closed in the last half decade, with the difference between the proportion of businesses reporting declining revenue and those seeing revenue gains falling from a net 20% in 2009 to a net 10% for 2014 so far.
World Bank refutes bitcoin naysayers
Since its inception, bitcoin has had numerous detractors who have labelled it part of an elaborate and well-orchestrated ponzi scheme.
“One of the most recent cases of bubbles occurred in the new ‘bitcoin’ experiment,” the report said. “Bitcoin is a crypto currency, the main and original attraction of which is the low transactions cost associated with its use. One can buy bitcoin the way one can buy euros and trade freely with others having euros.”
“Trouble started when people began speculating that the value of bitcoin would rise, thereby raising the demand for bitcoin and making the value-rise a self-fulfilling prophesy. In other words, what we witnessed recently in the bitcoin phenomenon fits the standard definition of a speculative bubble,” The World Bank said.
“Contrary to a widely held opinion, bitcoin is not a deliberate ponzi. And there is little to learn by treating it as such. The main value of bitcoin may, in retrospect, turn out to be the lessons it offers to central banks on the prospects of electronic currency, and on how to enhance efficiency and cut transactions cost.”
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