The NZ Government continues to roll out initiatives to support business through COVID-19. In addition to the tax changes, wage subsidy and consultancy support already available, last week the Government announced their Small Business Cashflow (loan) Scheme. This significant initiative will aid small to medium sized businesses who require a much needed cashflow injection.
From 12 May 2020, Inland Revenue will be taking applications and issuing loans to businesses with up to 50 full time equivalent (FTE) employees. Businesses will be eligible for a loan if it:
The scheme will provide $10,000 plus an additional $1,800 per FTE, up to a maximum of $100,000. Below is an example of what this will look like:
|Firm size||Base loan||FTE equivalent amount||Total loan|
Loans will be interest free if they are paid back within a year, however repayments will not be required for the first two years. If the loan is not repaid within a year the applicable interest rate will be 3% per annum, for a maximum term of five years. Businesses receiving the loan must use the money for core business operating costs (such as rent, utilities, rates, suppliers) and enter into a legally binding loan contract.
Businesses will need to apply for the loan through myIR, Inland Revenue’s secure online services facility (www.ird.govt.nz). The Government have indicated the loan scheme application process will be open for a period of one month but may be extended.
The Small Business Cashflow Scheme will be subject to an audit process led by the Inland Revenue and part of the legislation allows for the exchange of information for the wage subsidy scheme. The Commissioner will be able to use this information in connection with any of the Commissioner’s duties, powers or functions under the Inland Revenue legislation.
More information on the loan scheme, including eligibility criteria and a calculator to determine the amount a business can borrow, is expected to be available on the Inland Revenue website this week. We will continue to update our Nexia NZ COVID-19 section of our website with the latest information also.
Nexia New Zealand understand that many, if not all businesses, will be affected by these unprecedented and challenging times. We would encourage you to get in contact with us to discuss this scheme, ar any of the other Government relief initiatives available to your business.