Are you feeling the cashflow pressure? The government has recently announced three additional forms of financial support for businesses facing cashflow issues as a result of COVID-19, which could help.
Small Business Cashflow Scheme (SBCS) changes
1. Base Loan Amount Increased
The SBCS base loan will be increased to $20,000 (from $10,000). This means the amount that can be borrowed will be $20,000, plus $1,800 per full-time equivalent employee (up to 50 employees). The loan repayment period remains 5 years (60 months).
2. Interest Free Period
The first 2 years of existing loans will become interest-free provided the loan is not in default. Interest will apply at a rate of 3% per year on the remaining loan balance from the first day of the third year of the loan period.
3. Existing Borrowers Top-up Loan
Existing borrowers who already have a loan (and have not defaulted on this loan) will be able to apply for a top-up loan. They can borrow an additional $10,000 plus any amount they did not borrow in their initial loan. The top-up loan can be drawn down as a lump-sum or as up to four smaller instalments over time before the end of the scheme on 31 December 2023.
4. New Loans
New SBCS borrowers, and those that have already paid back their loan in full before 31 December 2023, can borrow up to the new maximum amount as a lump sum or as up to four instalments before the end of the scheme. The first two years of the loan will be interest-free from the date the loan is made available to them (further draw downs do not start a new interest-free period).
To apply for the SBCS and the top-up loan, log in to your My IR account at www.ird.govt.nz. The SCBS is open until 31 December 2023.
COVID-19 Support Payment Introduced
On 21 February 2022, a new targeted COVID-19 Support Payment (CSP) was announced for businesses struggling with revenue during the Omicron outbreak. The CSP is a payment to help support viable and ongoing businesses or organisations which have experienced a 40% or more drop in revenue as a result of one or more of the following COVID-19 circumstances:
- the widespread presence of COVID-19 in the New Zealand community
- the legislative public health measures taken in order to reduce the spread of COVID-19 in the New Zealand community
- any business circumstances that are, or are reasonably likely to be, a consequence of the circumstances described above
Three fortnightly CSPs are available. Applications opened for the first payment at 8am on 28 February 2022 for the period starting from 16 February 2022. Each CSP will be $4,000 per business plus $400 per full-time employee (FTE), capped at 50 FTEs or $24,000.
The maximum size of the CSP your business or organisation may be eligible to apply for depends on the number of FTEs you have, and your level of revenue.
An extension of IRD’s ability to remit penalties and interest
IRD now has extended its ability to remit penalties and interest as part of these latest changes. However, this will still be on a case-by-case basis and you should contact your Client Manager to discuss this and to consider the best approach.