The Business Advisory Blog

The Business Advisory Blog

Insight, news and updates from Alliott NZ Chartered Accountants, Auckland New Zealand. The views expressed here are the views of the author and should be discussed in further detail should an article be relevant to your individual circumstances.

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

Vanessa Williams
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COVID-19 Small Business Cashflow Scheme

Last week the Government announced it will provide interest-free loans for a year to small businesses impacted by the COVID-19 to support their immediate cash flow needs and meet fixed costs.

nz money 100s 50s generic n2It will provide assistance of up to $100,000 to businesses employing 50 or fewer full-time equivalent employees.

The Minister of Finance, Grant Robertson, stated “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

Eligibility criteria are the same as for the Wage Subsidy Scheme. The scheme is open to Sole traders and self-employed as well as employers. A reminder of the eligibility criteria is as follows:
 
  • 30% or more decline in revenue compared with last year for any month between January 2020 and the end of June 2020.
  • Applications can also be made on the basis of forecast revenue loss within the period of the scheme.
  • Employer must pay a minimum of 80% of the employee’s normal wages to qualify for a claim.
  • Employers must also have taken active steps to mitigate the impact of COVID-19. For example “engaged with their bank/financial adviser”. A declaration has to be signed to that effect.
Businesses will also have to declare that they are a viable business, that they will use the money for core business operating costs and enter into a legally binding loan contract.

Applications for the cashflow scheme are expected to be open from 12 May 2020 and businesses can apply for the loan payment through myIR on the IRD website.
 

Business Finance Guarantee Scheme (BFGS)

The Government is also making changes today to the criteria for the previously announced Business Finance Guarantee Scheme, including removing the requirement for a General Security Agreement.  We will advise as to further details as they come to hand.

NZ in lockdown

As we are still communicating with all our clients remotely, please ensure that you white label our email address to make sure that all our messages reach your inbox and not your junk folder.

Please contact our team via emailwebsite, Zoom or phone us on +64 9 520 9200. Many of you already deal with us exclusively via these methods and will experience no service change. We are very experienced in working remotely and welcome any enquiries you may have.

Topics: cash flow coronavirus COVID-19 cost accounting employers Interest rates loans small business wage subsidy