Small Business Cashflow Loan Scheme expanded

The Government launched the Small Business Cashflow Loan Scheme (SBCS) in May 2020 to assist small-to-medium businesses affected by COVID-19. Since then, over 100,000 SME businesses have used the opportunity to access tap into cheap working capital. Around 6,500 SMEs have so far made more than $45.4m in repayments.

Small Business Minister Stuart Nash reported that around 82% of loans are to firms with one to five employees and round 92% of loans are to firms with 10 or fewer staff.

After the initial launch of the scheme, and as 2020 ground on, the Government made further rounds of changes. They extended the application period and expanded eligibility for the scheme. New criteria for the Small Business Cashflow Loan Scheme (SBCS) now allow more businesses and organisations to apply, though the business needs to be in operation for at least six months before being eligible.

Businesses employing up to 50 full-time staff may apply to the Inland Revenue Department for loans of $10,000 plus $1,800 per employee. The loans:

• accrue interest at the rate of 3% for a maximum term of five years

• will not be liable for interest if repaid within two years

• require no repayments for two years, although voluntary payments can be made at any time.

The Government also revived COVID-19 level change subsidies by introducing a resurgence support payment and a wage subsidy payment for the level changes that occurred in February and March, for a limited time. As Wellington moved only to level two we have found most businesses tested did not meet the drop in revenue requirement of 30% and 40%, respectively, of these measures. If you think you were affected to that degree, contact us to test it for you.

You can find out more information on the IRD website, or contact us to find out if this loan scheme is right for you. (IRD link valid at March 8th 2021)