Govt will lend small firms up to $100K
THE Government is offering small businesses loans of up to $100,000 that are interest free for a year in an attempt to beef up cashflows.
The Business Cashflow Loan Scheme was announced by Minister of Finance Grant Robertson and Minister of Revenue Stuart Nash yesterday and will be made available to businesses with 50 or fewer full time employees.
‘‘It has become clear that the support that is available to our small and medium businesses from banks is not meeting their needs nor our expectations as a Government,’’ Mr Robertson said
The scheme would provide $10,000 to every firm and $1800 for each full time equivalent employee.
The loans would be interest free if they were paid back within a year, Mr Robertson said.
‘‘The interest rate will be 3% for a maximum term of five years. Repayments are not required for the first two years,” Mr Robertson said.
Mr Nash said the scheme gave businesses with little or no revenue through Alert Levels 4 and 3 access to cashflow.
‘‘The eligibility criteria are the same as for the
wage subsidy scheme,’’ Mr Nash said.
‘‘Businesses will also have to declare that they are a viable business, they will use the money for core business operating costs and enter into a legally binding loan contract.’’
Those terms were not available elsewhere, he said.
‘‘We are committed to sharing the burden of the impacts of Covid19. As a responsible Government we must ensure we are using taxpayer money carefully as we provide support for business.’’
Managed by Inland Revenue, the scheme would begin accepting applications after May 12 and ‘‘will pay out very shortly thereafter’’, Mr Nash said.
‘‘By helping small and mediumsized businesses to pay their fixed costs, in addition to the tax changes, wage subsidy, commercial property measures and consultancy support already available — we now have a substantive package to help these firms and sole traders get through this phase and into recovery.’’
The Government also took the requirement for a ‘‘General Security Agreement’’ off the loans that were part of the Business Finance Guarantee Scheme with banks.
Otago Southland Employers’ Association chief executive Virginia Nicholls said employers were supportive of the boost to cashflow the loans would bring.
‘‘There are many businesses who are facing significant challenges with cashflow. This will allow them to meet their operating costs.’’
She said many businesses were operating under constraints while others were still closed.
The wage subsidy scheme needed to be extended and commercial lease support was still needed, Mrs Nicholls said.
‘‘There also needs to be targeted help for the worstaffected businesses which would be helpful to support business continuity.’’
❛ It has become clear that the support that is available to our small and medium businesses
from banks is not meeting their needs nor our expectations as a
Government
Finance Minister Grant Robertson