Small Business Cashflow Scheme (SBCS) Interest Free Period ending

For those businesses that took out the SBCS loans, there is a two-year period from drawdown date when the loan incurs no interest. If you fully repay the loan within 2 years, you will not be charged any interest.

If the loan is not paid back in full within that time, interest will be charged, retroactive to the date the loan was made available to you for the duration it remains outstanding. The loans are subject to an annual interest rate of 3%.

You should check the date the loan was made to determine when your interest period commences (again effective for the two years and the remainder of the loan) and whether you are able to and want to repay the loan before then, to avoid there being an interest charge.

The loan scheme opened 12 May 2020 so the first loans hitting the two-year milestone will be 12 May 2022, four months from now.

Interest rates from commercial lenders are rising, (the official cash rate as of this writing is 0.75% and banks’ floating home loan rates around 4.7%) so it may be more economical to incur interest on the SBCS loan, albeit the first two years interest being added than undertaking bank loans. Cash flow has no interest cost but would be diverted from other purposes.

The SBCS loans must be repaid within five years (60 months) from drawdown. IRD will send you a payment schedule with the payment dates and amounts when regular payments are required to be made. Repayment is not required within the first 24 months.

Payments can be made via internet banking, using your IRD number reference and the tax type for SBCS repayments of SBC.

Note: if your business has not taken out this loan but is eligible, applications remain open until 31 December 2023 (link valid at 10 February).

If you’re unsure of its interest free timing or whether to repay the loan before then, please contact us.