| Small business support expanded
More small businesses will be eligible to take out interest-free loans under changes announced today to a government cashflow scheme.
Revenue Minister David Parker said one of the Government’s top economic priorities after taking office was to extend the Small Business Cashflow Loan scheme for three years and extend the interest-free period to two years.
“We have extended the purpose of the scheme and will enable borrowing for investment in new equipment and digital infrastructure,” David Parker said.
“In addition, firms can draw down a second loan, if they still meet eligibility criteria and have repaid the original loan in full. We want to keep viable businesses afloat where we can.
“Some firms have promptly repaid their original loan and may wish to draw down another loan as circumstances change. More businesses will have access to this line of credit to help them prosper.
“There are encouraging signs for our economy, but the global economic outlook remains uncertain. The scheme provides a backstop for small and medium businesses. The changes deliver on our election commitments,” David Parker said.
Small Business Minister Stuart Nash says cashflow support for small and medium enterprises (SMEs) has been central to government efforts to accelerate the economic recovery and sustain businesses and jobs.
“The interest-free loans have proven a popular and fast way to access finance. We are delighted to reach a milestone of 100,000 SMEs who have drawn on this government support to the tune of $1.6 billion.
“Many businesses have also repaid their loans as the economy continues to open up. Around 6,500 SMEs have so far made more than $45.4 million in repayments.
“As the economy moves into recovery and rebuild we are also broadening the eligibility criteria so more businesses can access support. Businesses established after 1 April 2020, which have existed for six months, will now be eligible for a loan if they meet other eligibility criteria.
“We are also changing the requirement that a business must have experienced a decline in actual or predicted revenue of at least 30 per cent in any 30-day period from January to June 2020, compared with the same period in the previous year.
“The new criteria are that businesses can demonstrate an actual drop in revenue of at least 30 per cent because of COVID-19, over any 14-day period in the previous six months, compared with the same 14-day period a year ago.
“If the applicant was not in business a year ago, the 14-day period can be compared with the same or similar period in the previous month. Businesses must also declare that the drop in revenue is due to COVID-19, and have records to support this.
“I’m particularly pleased that micro businesses, with between one and five staff, have made good use of the scheme. Around 82 per cent of loans are to firms with one to five employees. Around 92 percent of loans are to firms with 10 or fewer staff.
“The firms are diverse. Most loans have gone to SMEs in construction and building (17%), accommodation, restaurants and cafes (12%), those offering professional, scientific or technical services (10%), retail trade (9%), and manufacturing (7%).
“The decision to extend the interest-free loan scheme is designed to give confidence to our smallest businesses and keep up the momentum of recovery. The Government is continuing to back the business community,” Stuart Nash said.
The expanded eligibility criteria come into effect in February 2021.
(based on main city in region)
|Loan Amount ($mill)||Volume (Number of SMEs)||% of volume|
|Greater Auckland Region||$674||42,355||42%|
|No location Information||$15||948||1%|
David Parker – Vernon Small 021 849 517;
Stuart Nash – Kathryn Street 021 803707