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John Rowe

Government Business Loan Scheme

As part of the initiative to assist businesses suffering from the impact of Covid-19, the Government has created the Small Business Cashflow Loan Scheme (SBCS). Under this scheme, eligible businesses will be able to borrow up to $100,000, interest-free or at low interest rates, to help with their cashflow. 

Many small to medium businesses will have had a dramatic reduction in revenue due to their inability (or severely restricted ability) to trade while the country has been at Alert Levels 4 and 3. The Government has recognised that they are not getting the help they need from the banks and so the SBCS has been implemented to give those businesses extra support.

According to the Government’s press release:

•    Eligibility criteria are the same as those for the wage subsidy scheme, i.e. the business must have experienced a drop in revenue of 30%, or is predicted to do so, due to the effects of Covid-19. 

•    This scheme will be available to businesses employing 50 or fewer full-time staff, and includes sole traders.

•    Businesses must be viable and the funds must be used for core business operating costs.  

•    Companies can borrow $10,000 plus $1,800 per full-time employee, to a maximum of $100,000 (i.e. for a business with 50 staff). 

•    Sole traders will be able to borrow up to $11,800.

•    If paid back within a year, the loans will be interest-free. Otherwise the interest rate will be 3% for a term of up to five years, with no repayments required in the first two years. 

•    Applications for the scheme open on 12 May 2020 through Inland Revenue, and the Government will pay out soon after. 

As we understand it, business owners are not required to provide security over their personal assets (e.g. the family home) to qualify for these loans, which is different to normal business lending. On top of this, the interest rate is exceptionally low – even lower than the home mortgage rate. Normally a business loan which is secured solely over business assets is subject to much higher interest rates – upwards of 10% not being unusual. These factors, in our view, make the SBCS an amazing offering.


In summary, the Small Business Cashflow Loan Scheme is designed to help small to medium businesses who are suffering cashflow issues due to Covid-19. The terms of the loans are extremely favourable, so the scheme will likely achieve its desired outcome and be of benefit to many business owners whose revenue has been negatively affected.

If you need assistance in making your application, or in defining whether you are eligible, please contact us at GRA: + 64 9 522 7955, [email protected] or via our website

John Rowe
Business Accounting Services
© Gilligan Rowe & Associates LP

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Disclaimer: This article is intended to provide only a summary of the issues associated with the topics covered. It does not purport to be comprehensive nor to provide specific advice. No person should act in reliance on any statement contained within this article without first obtaining specific professional advice. If you require any further information or advice on any matter covered within this article, please contact the author.
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