This week, the Government announced some additional measures providing financial assistance to small businesses, as a response to challenges arising from the Covid-19 crisis.
1. "Small Business Cashflow Loan Scheme" - administered by the IRD
The scheme will provide businesses the option of obtaining loans that are interest free, if the loan is repaid within a year, then with 3% interest thereafter up to 5 years, with no repayments due for the first 2 years.
The scheme will provide loans of $10,000 per firm plus $1,800 per FTE (full time employee) equivalent, up to a maximum $100,000.
The loans can be used for core business operating costs (including, but not limited to, rent, insurance, utilities, supplier payments, or rates), and will be available to any ongoing business with the purpose of supporting it to remain a going concern.
Revenue Minister Stuart Nash stated:
“The eligibility criteria are the same as for the Wage Subsidy Scheme. 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” .
The Inland Revenue will start taking applications on May 12.
2. Update to the "Business Finance Guarantee Scheme" - administered by your bank.
The Government today announced it will remove the requirement for a General Security Agreement under the Business Finance Guarantee Scheme.
In other words, for loans of more than $50,000, a bank will no longer have to "use its best endeavours to obtain security from the borrower under a general security agreement".
“Further changes to the scheme will also be considered to ensure it plays a useful part in providing support to businesses," Finance Minister, Grant Robertson said.
If your business was unable to enter a General Security Agreement with your bank, such as this being already entered into on a first charge basis with a major supplier then these changes will provide you some potentially must needed access to liquidity financing.
Make it Simpler:
Businesses will need to contact the IRD and Banks directly in order to apply, however, our Simpler advisers can provide guidance on the ins and outs on these applications and the processes involved.
Related Tag: Business Mortgage Brokers