Loan Scheme further extended to keep Businesses afloat
The Small Business Cashflow Loan Scheme has already been extended once, to 24 July. Revenue and Small Business Minister Stuart Nash says it will be further extended to 31 December, to give assurance that business support remains available over coming months.
Small businesses are getting greater certainty of Financial support with an extension to the interest-free cashflow loan scheme till the end of the year.
Government wants to continue to back the small businesses in the post-lockdown environment, thus the decision to extend the interest-free loan scheme as a way to give confidence and keep up the momentum of recovery.
This will also ensure that businesses aren’t pressurised to decide if the loan scheme would be right for them. Extension of this scheme will be helpful for businesses to carefully take time and evaluate their situation as the economy is still opening up. Businesses with temporary cashflow issues during the lockdown are now taking advantage of one of the most open economies in the world. More than 1,500 borrowers have already repaid almost $4.9 million.
As of Friday 3rd July- 90,485 small businesses had applied for more than $1.51 billion of loans since 12 May.
The average value of each loan is modest, around $16,700.
The Government intends to keep businesses afloat and protect as many jobs as they can. These loans are a useful complement of the wage subsidies introduced by the New Zealand government this year. The cashflow supports will cover the non-wage costs while the wage subsidies will help these businesses keep their staff.
Around 80% of firms who have applied for these schemes are with 1 to 5 staff and just around 90% are with 10 or less staff.
These loans are much needed support for the small to medium businesses that couldn’t get support from the banks as the banks might ask them to put their house as collateral and it won’t be feasible for these struggling businesses. The firms are diverse, and most applications are from industries in construction, accommodation, restaurants and cafes, retail trade, transport, and manufacturing.
The Loan Terms and conditions remain the same: – overview
Loans are interest free if repaid within a year.
After one year the interest rate is 3%, from the date of drawdown, for a maximum term of five years.
Repayments are not required for the first two years.
SMEs employing 50 or fewer staff, who were eligible for the original wage subsidy, are eligible to apply for the one-off loan.
The loan amount is $10,000 plus $1,800 per equivalent full-time employee, up to a maximum amount of $100,000.
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Visit here for more information: https://www.ird.govt.nz/covid-19/business-and-organisations/small-business-cash-flow-loan
Source: beehive.govt.nz