The government has announced more support measures for New Zealand’s small to medium businesses, with finance minister Grant Robertson commenting that the assistance currently in place is not enough.
Struggling businesses will now be able to access up to $100,000 in interest-free and low interest loans under the Small Business Cashflow Loan Scheme. The loans will be available to operations with 50 or less staff.
Robertson said that the eligibility would be the same as that for its wage subsidy scheme - a demonstrated 30% drop in revenue as a result of COVID-19, the retention of employees and payment of at least 80% of their wages.
IRD will be in charge of the process, and will conduct audits further down the line to ensure that all businesses that apply are viable.
“We have a significant package to cushion the blow of COVID-19 for businesses, to protect jobs and put New Zealand’s economy on a footing to get going again off the back of the amazing work that New Zealanders have already done,” Roberson commented.
“Many small businesses in New Zealand are based upon individuals, and the capital in their business is being created off the back of their own house or savings. Those people can’t always get the support that they need from a bank.”
The vast majority of insurance and financial advice businesses in New Zealand are either one-person ‘lifestyle’ businesses or firms of 10 people or less, meaning this option will likely become more attractive compared to the loans offered by the main banks. Robertson says the scheme has been specifically tailored to SMEs, and the government is still working on adjustments to its business finance guarantee scheme.
“This is a scheme that’s designed specifically for small and medium enterprises, and we believe it’s a scheme that will be welcomed,” he said.
“It will give instant access to the cashflow and working capital that’s needed to support these businesses through the situation.”
“We are continuing to tweak the criteria of the business finance guarantee scheme, and we work with the banks to ensure that it does play its part,” he added.
“But when it comes to SMEs, we think this kind of bespoke scheme delivered directly by the government will mean that they’ll get the cashflow they need.”