5/06/2020 GOVERNMENT UPDATE: The application period has now been extended to 24 July 2020.
The NZ Government passed legislation on 30 April 2020 by which the Government will lend “viable” businesses that employ 50 or fewer full-time equivalent staff loans under a new “Small Business Cashflow Loan Scheme” (SBCS).
The Inland Revenue Department will be responsible for administering the new loan scheme.
The loans can be used for core business operating costs and will be available to any ongoing businesses with the purpose of supporting it to remain a going concern, however the benefit of the loan cannot be passed through to the owners of the business, for example as a loan to the shareholders or owners.
Those who are eligible will be entitled to a one-off loan to the maximum amount of $10,000 plus $1,800 for every full-time equivalent employee (limited to a maximum of 50 employees).
If a business for example is a sole trader with only the sole trader as an employee, the business would get $10,000 as a base loan plus $1,800 for the sole trader as employee therefore $11,800. If a business for example employed 50 people, it would be eligible for $10,000 as the base loan plus $90,000 which is $1,800 for each of the 50 full-time employees therefore a total of $100,000.
Payments will be made with 5 days of loan approval.
The Government indicated that the loans will be interest free if it is repaid within a year. If the loan is not repaid within a year an interest rate of 3% will be charged for a maximum term of five years. Repayments will not be required for the first two years.
Revenue Minister Stuart Nash said “The eligibility criteria are the same as for the Wage Subsidy Scheme. Businesses will also have to declare that they are a viable business, they will use the money for core business operating costs and enter into a legally binding loan contract,”
The Inland Revenue will start taking applications on 12 May 2020 and will close 12 June 2020.
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