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Changes to the Small Business Cashflow Loan Scheme

Shelley Yeates
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Recently the government announced changes and an extension to its Small Business Cashflow Loan scheme.  The changes to the scheme are as follows:

  • The cut-off date for applying for these loans has been extended out to 31 December 2023 (previously was 31 December 2020).
  • No interest will be charged if the loan is now repaid in two years (previously one year).
  • The criteria for use of the loan funds has now been broadened, so you can now choose to use the loan funds to invest in your business e.g. capital expenditure.  Previously the funds had to be used for core operating costs.

The date that these changes will come into force has not yet been announced (but it will be before the end of 2020) and it is possible there may also be further changes.  At this stage all other aspects of the loan scheme remain in place, including:

  • It is for businesses with 50 or fewer full time equivalent employees,
  • You must have been in business on 1 April 2020 and have experienced a 30% decline in revenue as a result of Covid-19 restrictions,
  • The maximum amount that can be borrowed is $10,000, plus $1,800 per full-time-equivalent employee and only one amount can be drawn down,
  • The loan is for a maximum period of five years and if the loan is not repaid by the end of the interest free period, interest will be charged from the date of the original loan drawdown at an interest rate of 3% (i.e. there will be no interest free period).

If you have not yet taken advantage of this loan scheme and you are eligible, we suggest that you might want to apply for a loan, especially now that they have extended the interest free period to two years.

For those of you that already have a Small Business Cashflow loan in place, Inland Revenue have indicated that the terms and conditions for existing loan contracts will change to the new terms and conditions above.

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