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Small Business Cashflow Loan Scheme

The Government has announced a new Small Business Cashflow Loan Scheme, targeting those who have a viable business but have been put in a position of not generating any revenue. Legislation authorising the Inland Revenue to administer the scheme was passed on Thursday 30 May, with the terms not available anywhere else.

Here are some more details about the new Scheme.

  • Viable firms that employ 50 or fewer full-time staff can loan up to $100,000 under the new Scheme.
  • Firms can be loaned $10,000 each. The loan can then be extended by $1,800 for every full-time employee.
Firm sizeBase loanFTE equivalent amountTotal loan
Sole trader$10,000$1,800$11,800
3 FTE$10,000$5,400$15,400
50 FTE$10,000$90,000$100,000
  • The loans will be interest free if repaid within a year. 
  • After a year 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.
  • Finance Minister Grant Robertson noted that Inland Revenue already has a lot of information about businesses, making it well-placed to do the credit risk assessments. 
  • Borrowers will be audited, and Inland Revenue will be given more resource for audits. 
  • This scheme is distinct from the Business Finance Guarantee Scheme, through which taxpayers are underwriting 80% of individual bank loans to eligible SMEs. 
  • The Business Finance Guarantee Scheme’s rules will also be changed, so more businesses are eligible.
  • Banks can now lend to agricultural businesses under the Scheme and can provide unsecured loans.

“We are committed to sharing the burden of the impacts of COVID 19. As a responsible Government we must ensure we are using taxpayer money carefully as we provide support for business.” Hon Grant Robertson, Finance Minister

Read more on following links:

Contact us first to assess if the Scheme is for you.

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