Every small business in New Zealand is now entitled to a $10,000 interest-free loan
Businesses with 50 employees or less are now entitled to an interest-free loan of $10,000, and depending on the size of the business, the loan could be extended to as much as $100,000.
The Small Business Cashflow Scheme loans can be used for core business operating costs, such as rent, insurance, utilities, or rates, and will be available for any business with the purpose of remaining open during the COVID-19 crisis.
The scheme will provide a base $10,000 loan to every company and an additional $1800 per full-time employee, so a sole trader would get the base $10,000 plus $1800, leaving them with an $11,800 interest-free loan.
A business with 50 employees would also get the base $10,000 loan, but would also get $90,000 as per the $1800 per worker, and so the total loan would be worth $100,000.
It's important to note that the loans will only be interest-free if they are paid back within a year. The interest rate will be 3 percent for a maximum term of five years; however, repayments are not required for the first two years.
The eligibility criteria for the loans is the same as the wage subsidy scheme, where business must prove a 30 percent drop in income because of COVID-19.
Businesses will also have to declare that they are a viable business and that they will use the money for core business operating costs and enter into a legally binding loan contract.
The scheme will be administered by Inland Revenue who will be taking applications from May 12 in about two weeks' time and they will pay out shortly thereafter.
The start date for the small Business loan scheme is today the 12th of May 2020.
We have previously given clients information on the Small business loan scheme, to see this information - Check here
From today, you may now apply for these loans.
Applications are open from 12th May to 12th June 2020.
- here is the link to apply
- Go to MYIR
- Go to the 'I WANT TO' section
- Select ' APPLY FOR THE SMALL BUSINESS LOAN'
If you have any difficulties or need help, please do not hesitate to give us a call.