The Government announced today it will provide interest-free loans for a year to small businesses impacted by the COVID-19 response.
Many businesses have been unable to trade through Level 4 and some remain unable to re-open safely at Alert Level 3. By taking these measures needed to keep all of us safe, some small businesses have no revenue to meet fixed costs.
The Small Business Cashflow Loan Scheme will provide 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 employee. Loans will be interest free if they are paid back within a year. The interest rate will be 3% for a maximum term of five years. Repayments are not required for the first two years.
Eligibility criteria are similar to those of 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 size of the loan would be commensurate with the size of the firm, based on employee numbers. It will be available for applications from 12 May, once Inland Revenue stands up the system needed to administer the loans.
To find out more about the announcement, you can read the Minister of Finance’s press release below.
Inland Revenue will publish information about the scheme on its website next week: ird.govt.nz