Small businesses fast to take up govt loan scheme

More than 6000 businesses have applied for a loan under the government’s small business cash flow loan scheme (SBCS), which was accessible from yesterday.

The total loan amount applied for under the scheme in the first few hours of operation ‘‘far exceeds $100 million’’, Revenue Minister Stuart Nash said.

Prime Minister Jacinda Ardern announced yesterday that businesses can now apply for the scheme through Inland Revenue’s website. She said the loan will be ‘‘working capital for businesses’’ and will help with fixed costs like rent.

Payments to businesses will be made within five days of the loan being approved, she said.

The scheme is open to businesses that have fewer than 50 employees. Each business can claim a one-off loan of up to $10,000 and an extra $1800 per full-time employee, reaching a cap of $100,000

Ardern said the loan will be interest free if it’s paid back in full within the next 12 months, but repayments aren’t compulsory for the first two years.

Following the interest-free period, businesses will be charged a three per cent interest rate annually, for up to five years. The loan is not subject to income tax or GST. Businesses will also be able to claim deductions for expenditure funded by the loan.

The scheme was announced by Finance Minister Grant Robertson in early May, following on from the Business finance guarantee scheme announced in March, which allowed businesses to approach banks for loans.

Robertson said in the House yesterday the business finance scheme has been ‘‘tweaked’’ and he will consider further ‘‘tweaks’’.

Robertson said banks have provided $5 billion of ‘‘additional support’’ to businesses, but the government wanted another avenue for small and medium businesses to access funds.

He said on May 1 that the small business cash flow loan scheme was necessary because it had become clear that the support banks were providing to small and medium-sized businesses was ‘‘not meeting their needs nor our expectations as a Government’’.

Self-employed and sole traders are also eligible for the loan scheme, with the ability to borrow up to $11,800. Applications for the loan would be open until June 12.

Money has also started coming to businesses in the form of tax refunds under the loss carry-back scheme. Nash said $62m had been refunded in the first week of the scheme, benefiting 676 small businesses.