SMALL BUSINESS CASHFLOW (LOAN) SCHEME

Latest updates from the Government COVID-19 Support Package include the release of the SMALL BUSINESS CASHFLOW (LOAN) SCHEME (SBCS).

The SBCS is live today, 12th May 2020. The Government has introduced this latest measure to support businesses and organisations struggling due to loss of actual or predicted revenue as a result of COVID-19.

Key points to the scheme:

One-Off loan, applications will be open from 12th May 2020 to 12th June 2020 inclusive
Your organisation must have 50 or fewer full-time equivalent employees
Maximum loan $10,000 + $1,800 per full-time-equivalent employee
Annual interest rate will be 3% from the date the loan is provided
Fully repayable within 5 years from the date the loan is made available
Interest free if fully repaid early – within one year

The IRD will administer the payments and repayments of this scheme.

The loan comes with terms and conditions.

A legally binding contract needs to be applied in accordance with the declaration that you make at time of signing. IRD do not provide legal or financial advice, and there may be questions around whether this loan is right for you, or whether you need to seek the consent of your bank or another lender to your business or organisation.

The loan should be used for CORE OPERATING COSTS, such as rent, rates, and other day to day expenses. It should not be used to pay shareholders drawings or dividends.

Who is Eligible?

The test is effectively the same as the wage subsidy eligibility. This includes confirmation that your business or organisation is experiencing a minimum 30% decline in actual or predicted revenue any month from January 2020 to June 2020.

Also if you were to apply for the wage subsidy for all your employees, and the wage subsidy was or would have been $351,480 or less, then you should be eligible for the SBCS loan.

You do not need to have applied for the wage subsidy to get the SBCS loan.

MBIE has a handy eligibility tool to help you self check whether you would qualify for either the SBCS or the wage subsidy.

You may need our help

Your business must have evidence or a plan to show it is viable. Directors or owners should have good reason to believe it is more likely than not, that the business or organisation will be able to pay its debts as they fall due within the next 18 months. You can document this through;

A documented plan for where you expect revenue to come from in future market conditions, and
A cashflow forecast of those revenues and your expected expenses
Financial statements showing there are enough resources to sustain the business, including repaying the SBCS loan
Potentially forecast modelling of the balance sheet
Accountants assessment that the business or organisation is viable and ongoing

Other points to note

Once approved, the IRD have advised you should receive the loan payment in full within 5 working days, to the bank account linked to your MyIR Account.

There will be no loan adjustments for any tax debt owed and the loan is not subject to income tax or GST.