May-Jun 2020: Small Businesses Urged Not to Delay Loan Application
Inland Revenue administers the Small Business Cashflow scheme which runs until 12 June and the IRD is urging those looking to apply for loans to do so quickly.
The loans are available for small businesses struggling with loss of revenue due to COVID-19. 99.8% of all applications have been made successfully through the IRD’s secure online service, myIR and 88% of those were from recipients of the wage subsidy.
In most cases, businesses will be entitled to a base loan amount of $10,000 plus $1,800 per full-time-equivalent employee, to a maximum of $100,000.
To be eligible for a loan, an applicant must have 50 or fewer full-time-equivalent employees and qualify for the Wage Subsidy Scheme even if they have not applied for the subsidy. The business must also have a sound plan to be viable and ongoing, and it must hold information on file to verify this.
46% of approved loans applicants have between 2 and 10 employees. And 43% are sole traders with the business owner the only person working in the business.
The loan has a five-year term and must be repaid by 31 July 2025. Interest will not be charged if the loan is fully paid back within one year, otherwise, annual interest will be charged at 3% beginning from the date of the loan being provided.
It’s essential that people fully understand the loan terms and conditions as set out in the loan contract which are available on IR’s website www.ird.govt.nz/covid-19. Businesses should speak with their financial advisors before applying.