Cash-flow support for small business
The Government recently announced that it will provide interest-free loans for a year to small business impacted by the COVID-19 economic shock to support their immediate cash flow needs and meet fixed costs. You can find out more information about the scheme and other cash flow considerations at the recent Morning Mahi video above, or find out more about the scheme below.
Applications opened on Tuesday 12 May and will be open until 12 June.
Read the Beehive release here.
IRD small business cash flow loan scheme here
Official Covid website here.
The Small Business Cashflow Loan scheme (SBCS) provides assistance of up to $100,000 to firms employing 50 or fewer full-time equivalent employees. The scheme will provide $10,000 to every firm and in addition $1800 per equivalent full-time equivalent employee.
For example:
The Loans will be interest free if they are paid back within a year. After that, the interest rate will be 3% for a maximum term of five years. Repayments are not required for the first two years.
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 scheme is administered by Inland Revenue who will be taking applications from 12 May. Businesses and organisations need to apply through their MyIR. If you are considering applying your Findex adviser is happy to assist with this.
This could be a short term lifeline for businesses with much-needed cashflow. It does have a few key considerations:
It is a loan so will need to be paid back
If clients are saying they can’t pay their tax, this might get thrown back at them – just apply for the government loan.
Remember this is debt. Not a grant. So if you don’t have to do this, please don’t.
For more information on COVID-19 and what it means for your business, click here.