Covid-19 Special Edition; Small Business Cashflow Loan Scheme
Updated: Jun 11, 2020
Taxpayers will lend "viable" firms that employ 50 or fewer full-time staff loans of up to $100,000 under a new “Small Business Cashflow Loan Scheme”.
The Government said it will loan firms $10,000 each. The size of these loans can be extended by $1800 for every full-time employee the firm has. Here’s an example of what this will look like:
The loans will be interest free if they are repaid within a year. Thereafter an interest rate of 3% will be charged for a maximum term of five years. Repayments won’t be required for the first two years.
The Inland Revenue will start taking applications on May 12. At this stage, it will only take applications for a month. This window will be reviewed.
The loans can be used for core business operating costs (including, but not limited to, rent, insurance, utilities, supplier payments, or rates), and will be available to any ongoing business with the purpose of supporting it to remain a going concern.
The benefit of the loan cannot be passed through to the shareholders or owners of the business, for example, by a dividend or a loan to the shareholders or owner.
Businesses will have to declare they are "viable", use the money for core business operating costs and enter into a legally binding loan contract.