Small Business Cashflow Loan Scheme (SBCS)
Applications close 12 June 2020 (now extended to 24 July 2020)
The scheme will provide $10,000 and an additional $1800 per equivalent full-time employee, up to $100,000 to small and medium businesses who are eligible.
- Wage Subsidy Scheme criteria applies
- Businesses with 50 or fewer full-time equivalent staff members
- Your business must be viable
To be eligible for the SBCS loan your business or organisation needs to be viable and you must have a plan to ensure it remains viable. This generally means the directors or owners have good reason to believe it is more likely than not the business or organisation will be able to pay its debts as they fall due within the next 18 months.
You must keep any evidence of the business or organisation’s ongoing viability at the time of requesting the loan, as IRD may audit your application.
Evidence might include, for example:
- A cashflow forecast for the business or organisation for the short term
- A plan for where revenue will come from in future market conditions, and a forecast of those revenues
- Financial statements showing the business or organisation has enough resources to sustain itself when including the SBCS loan
Maximum SCBS loan size
The maximum size of the loan depends on the number of full-time equivalent employees calculated from wage subsidy funding.
How to apply
Business and organisations will be able to apply for SCBS loan through myIR.
Navigate to the “I want to” section of myIR, select ‘Apply for a Small Business loan’.
Please note we cannot apply on your behalf. The SBCS must be applied for through your myIR account. If you do not have one you will need to create one before you can begin this process.
Repaying the loan
You will have 5 years (60 months) to pay off the loan. Later this will include the ability to set up instalments.
Loans will be subject to an annual interest rate of 3% from the date it is provided. During the loan period, the following general rules apply:
- If you repay the loan in full within 1 year you won’t be charged any interest.
- If you do not repay the loan in full within one year, you will be charged interest for the entire term of the loan.
- Repayments are not compulsory in the first 24 months.
- Voluntary payments can still be made over this period.
- After 24 months, you will be required to make regular payments for both the principal and interest.
Click here for more information.
COVID-19 Wage Subsidy Extension
As outlined in the Budget the Wage subsidy has been extended.
- Wage subsidy extension will be available from 10 June 2020 until 1 September 2020
- Applications open from 10 June 2020
- You must have had, or expect to have, a revenue loss of at least 50% for the 30 days before you apply, compared to the closest period last year (Updated 5 June 2020: This has now changed to 40% drop in revenue for a 30 day period in the 40 days before applying (starting no earlier than 10 May 2020), compared to a similar period last year)
- It will cover 8 weeks per employee from the date you submit your application
- It will be paid to you as a lump sum at the same weekly rate as the Wage Subsidy
Two other key features of the Wage Subsidy Extension
- If you have given employees notice of redundancy, you won’t be eligible to receive the subsidy for those employees unless you withdraw the redundancy notice
- If the amount of the subsidy is more than an employee’s usual wages you must use the surplus to fund other employees wages where possible and, where this is not possible, return any surplus funding to MSD. Those obligations will also apply to self-employed workers, i.e. if you are self-employed and you receive a subsidy that is more than your usual earnings, you will be required to repay the balance to MSD.
You will need to agree to certain obligations, such as:
- Pass the subsidy on to your employees
- Retain your employees for the duration of the subsidy
- Do your best to pay your employees at least 80% of their normal pay
- Take active steps to mitigate the impact of COVID-19 on your business
Two other key feature
Please note that you cannot apply for the Wage Subsidy Extension for an employee until their 12-week Wage subsidy has finished.
For more information, click here.
Contact us is you require any assistance.