'It's really bad now': Sydney businesses fear this second lockdown could drive them to the wall

“The biggest issue for businesses at the moment in lockdown is cash flow,” said Mark Lockwood, director of transaction management at Tenant Representation Services. “They’re not getting cash in from operating their businesses and, in addition, their customers are delaying paying invoices.

“So, if we go into an extended lockdown, some just won’t make it through. Most had only just started to recover from the last time, and now they’re being impacted again. They need this financial support from the government, but they also need help from the banks, and there’ll be a lot of conversations going on again between landlords and tenants.”

Restaurateur Vivien Chen is a case in point. Her popular Yang’s Dumpling Restaurant in Burwood is usually bustling, with queues of people lining up outside for their dumpling fix. On Tuesday night, it was almost deserted.

“This lockdown is proving very, very hard for us,” said Ms Chen, 36. “Our business is more than 75 per cent down compared to this time last year, and it’s really bad now; there are virtually no customers.

“Yesterday, I made $200, which isn’t even enough to cover my employee costs. And I really want to keep my staff because, if they go, I won’t have staff anymore when this lockdown finished. The help the government is offering is very crucial for us, but the help needs to be faster than it was last time.”

Many of her friends, she reports, have already closed their businesses. They struggled during the previous lockdown, and this one proved the last straw. “They couldn’t manage with the opening then closing, opening and closing,” she said. “So, they’ve given up and closed permanently.”

The COVID-19 support packages from the NSW and federal governments announced on Tuesday, as Sydney entered its third week of lockdown, involves emergency payments to workers and business cashflow support – as long as companies don’t sack staff.

Businesses with a turnover 30 per cent lower than the equivalent two weeks in 2019 will receive between $1500 and $10,000 a week, calculated as 40 per cent of the business’s NSW payroll payments. Sole traders can receive a flat payment of $1000 per week, and businesses with an annual turnover of between $75,000 and $50 million will also receive support.

The NSW government is also offering incentives for residential landlords to reduce rent for affected tenants, as well as a 60-day eviction moratorium for people who fail to pay their rent after losing at least 25 per cent of their income. There’ll also be tax exemptions for small business grants from the federal government and payroll tax relief.

“But one of the problems is that last time it was so bureaucratic,” said Steve Urwin of Kernel Property. “You had basically to disclose everything, and even though the government mandated the rebates, they gave you a big legal letter with many conditions, like if you defaulted on your lease, you’d have to pay back the money.

“Now, everyone is feeling so beaten and bruised. It’s so hard to keep demonstrating the losses, too. The businesses are trying to keep people on, but it’s hard when there are no customers coming through the door. Cafes are now just a shadow of what they previously were, mum and dad landlords are battling when their tenants can’t pay rent, and everything’s so smashed.”

The Property Council of Australia, however, is more optimistic about the likely outcome of the lockdown. Chief executive Ken Morrison said, “The support packages from the federal and NSW governments are very substantial and will help keep many businesses going.

“Commercial property owners are also doing their bit, engaging with their impacted small business tenants and providing support on a case-by-case basis.

“We don’t know how long this outbreak will last, well beyond the end of this week clearly, but it will be critical that we get a fast start to business recovery when it ends. In particular, we’ve seen the slow pace of CBD recovery after past lockdowns. Governments need to pull out all stops to accelerate this restart when the time is right.”

AMP Capital’s chief operating officer Luke Briscoe is also cautiously upbeat. He says the governments’ support packages are “a very positive way forward, and it’s great to see both governments working together to complement what’s already been done by a number of landlords across the market.”

He said the code of conduct introduced last year had been a good step, and the rent relief had been enormously valuable.

“But the big challenge, of course, is that we don’t know how long we’ll be in this situation,” said Mr Briscoe. “The packages will provide some stability in the short-term for employees and their staff, but should the lockdown go on beyond three or four weeks; then the help will need to be extended. We all do need to work together to get through this.”