Eligible businesses including self-employed can apply until December 31
Wellington, July 5, 2020
Small businesses are getting greater certainty about access to finance with an extension to the interest-free cashflow loan scheme to the end of the year, Revenue and Small Business Minister Stuart Nash has said.
He issued the following Statement at the Labour Congress today (July 5, 2020):
The Small Business Cashflow Loan Scheme has already been extended once, to July 24, 2020.
It will be further extended to December 31, 2020, to give assurance that business support remains available over coming months.
The decision to extend the interest-free loan scheme is designed to give confidence to our smallest businesses and keep up the momentum of recovery.
It shows that the government is continuing to back them in the post-lockdown environment.
It will ensure that businesses are not under pressure to decide quickly whether the loan scheme is right for them. Extending the scheme will give businesses owners more time to carefully evaluate their situation as our economy keeps opening up.
The interest-free loans came at just the right time. Businesses with temporary cashflow issues during the lockdown are now taking advantage of one of the most open economies in the world. More than 1500 borrowers have already repaid almost $4.9 million.
We want to protect jobs and keep as many businesses afloat as possible. The loans are a useful complement to the wage subsidy.
They provide businesses with cashflow support for non-wage costs, while the wage subsidy ensures they keep staff on the books.
I am particularly pleased that micro businesses, with between one and five staff, have made good use of the scheme. Around 80% of firms who applied have one to five employees, and just over 90 percent have 10 or fewer staff.
As at July 3, 2020 (Friday), 90,485 small businesses had applied for more than $1.51 billion of loans since 12 May. The average value of each loan is modest, around $16,700.
But it is much needed working capital to help in a tight spot.
The loans are a backstop for small and medium businesses who are not able to get the cashflow support they need from banks. Many do not have a well-established relationship with their bank, or the bank might ask them to put up their house as collateral. That just does not work for these firms.
The firms are diverse, and most applications are from industries in construction, accommodation, restaurants and cafes, retail trade, transport and manufacturing.
The loan conditions remain the same. I urge business owners to talk to their bookkeeper, tax agent or accountant, or log onto the MyIR portal, to ensure they take advantage of this government support.
Terms and Conditions
Loans are interest free if repaid within a year. After one year the interest rate is 3%, from the date of draw-down, for a maximum term of five years.
Repayments are not required for the first two years.
SMEs employing 50 or fewer staff, who were eligible for the original wage subsidy, are eligible to apply for the one-off loan.
The loan amount is $10,000 plus $1800 per equivalent full-time employee, up to a maximum amount of $100,000.
More information here: www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan