June 5, 2020 News and Views No Comments

To assist small businesses with cash flow during the COVID-19 recovery, the government has announced a special Small Business Cashflow Scheme (SBCS) which provides loans on very attractive terms.  Applications will open in 12th May and continue until 12Th June.
The loans will be administered by Inland Revenue, and you will need to apply through the MyIR website, which means you must have a MyIR login for your business. We will not be able to do this application for you, but can assist with information and advice if needed.  Here are some basic details of the scheme:

  1. In most cases, businesses will be entitled to a loan of $10,000 plus $1,800 per full-time-equivalent employee to a maximum of $100,000.
  2. To qualify for a loan, a business or organization must already be eligible for the wage subsidy scheme, have 50 or fewer full-time-equivalent employees and the business must have a sound plan to be viable and ongoing for at least 18 months, and hold information to on file to verify this.
  3. The loan has a 5 year term and must be repaid by 30th June 2025.
  4. The annual interest rate is 3%, but no interest will be charged if the loan is fully repaid within the first 12 months.
  5. Repayments are not compulsory in the first 24 months.
  6. The loan must be used to pay the running costs of the business and not passed onto the owners.

If you think it will be worthwhile for you to apply for this loan, you need to have a plan to demonstrate that your business will be viable for 18 months.
Examples of this could include

  • A cash-flow forecast for the next 18 months and
  • Financial statements showing the business has enough resources to survive over that period.

Do let us know if you need help in evaluating the businesses viability or if you have any other questions on this scheme.

Disclaimer

The material on this website is for the benefit and information of clients. The items are in the nature of general comments only, and are not to be used, relied or acted upon without seeking further professional advice. Hounsell Accounting Limited accepts no liability for any errors or omissions, or for any loss or damage suffered as a result of any person acting without such advice

Written by Don Hounsell