What is the new small business scheme?

The new Small Business Cashflow Scheme (SBCS) means that small to medium business owners (including sole traders and the self-employed) may be able to grab themselves a one-off loan if they have been negatively affected by Covid-19. 

If you have had a huge loss in revenue during the lockdown period and now your business is desperate for some much-needed cash flow, then you could be provided assistance of up to $100,000. 

As per the advice from the Minister of Finance and Minister of Revenue, the scheme will provide $10,000 to every firm as well as $1800 per equivalent full-time employee. 

There will be no interest charged if the loan is repaid in full within the first 12 months. After this time interest will apply for the entire period of the loan at a rate of 3%. 

There are no repayments required for the first 2 years. 

If you default on a payment the IRD’s default interest rates will apply. Make sure you are aware of your position and ability to pay back this loan before you take it out (chat to us)!

There are undertakings required for this loan, one of these is that you must live in New Zealand while there is an outstanding balance on the loan. 

The loans must be used for operating expenses. They cannot be paid to your shareholders or business owners.

Full repayment of the loan can be required if you stop trading as that business: 

• you sell the main assets of the business

• you miss a payment on the loan

• you look at insolvency options for your business or yourself as a sole trader.

The scheme will be administered by Inland Revenue who will be taking applications from the 12th of May and IRD is there to support businesses that have been adversely impacted by Covid-19.

If you applied for the Wage Subsidy Scheme, the eligibility criteria are the same. You’ll be advised to declare that you are a viable business, that you’ll use the money for core business operating costs and enter into a legally binding loan contract. How much you can borrow is based on the Covid-19 wage subsidy you received, or the wage subsidy you would have received if you had applied for it.

Get ahead and register your small to medium business with a myIR account so that you’re prepared for when applications open. 

In the meantime, utilise Inland Revenues small business cashflow loan calculator to work out how much you could borrow under the Small Business Cashflow Loan Scheme.

If you’re not sure if your business is eligible for the small business cash flow loan, flick us an email and we will help you out.