The government has extended the deadline for small business cashflow loan scheme applications until the end of the year.
The government initially extended the deadline of the applications to July 24, 2020. However, it decided to extend the deadline to December 31 to continue supporting businesses amid the COVID-19 crisis.
Under the small business cashflow loan scheme, small businesses can receive unsecured loans of up to $100,000 without interest if repaid within a year.
“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. It shows the government is continuing to back them in the post-lockdown environment,” said Revenue Minister Stuart Nash, as reported by Interest.co.nz.
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The government expects the extension to reduce pressure from businesses as they now have more time to evaluate their situation and consider whether the loan scheme will fit their plans over the next few months.
“We want to protect jobs and keep as many businesses afloat as possible. The loans are a useful complement to the wage subsidy. They provide businesses with cashflow support for non-wage costs, while the wage subsidy ensures they keep staff on the books,” Nash said.
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So far, approximately 80% of businesses that applied for the loan scheme have one to five employees, and over 90% have 10 or fewer employees.
“The interest-free loans came at just the right time. Businesses with temporary cashflow issues during the lockdown are now taking advantage of one of the most open economies in the world. More than 1,500 borrowers have already repaid almost $4.9 million,” Nash said.
“The loans are a backstop for small and medium businesses that are not able to get the cashflow support they need from banks. Many don't have a well-established relationship with their bank, or the bank might ask them to put up their house as collateral. That just doesn't work for these firms.”