GRA Blogs

Articles by John Rowe

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.

Summary

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
Director
Business Accounting Services
© Gilligan Rowe & Associates LP

Did you like this article? Subscribe to our newsletter to receive tips, updates and useful information to help you protect your assets and grow your net worth. We're expert accountants providing expert advice to clients in NZ and around the world.

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.
Testimonials
Hello Matthew, I am just wishing you the best of success with your excellent book Property 101. It is very rare that I come across a book on real estate that is in the league of other financial securties writer's. Thank you for taking the time and more importantly writing about real estate in a easy to read manner. I am still learning after 30 years in real estate. I am also a true contrarian like yourself and have learned this art from my favourite contrarian, Jim Rodgers (Former Quantum Fund). I have been preaching this to our Investor net work and corporate clients for some time, but most find it very hard to-do. Thanks again! Kind Regards, - Chris Kerr - The New Kids On The Block Pty Limited - October 2015
We can help
Here's how

Gilligan Rowe and Associates is a chartered accounting firm specialising in property, asset planning, legal structures, taxation and compliance.

We help new, small and medium property investors become long-term successful investors through our education programmes and property portfolio planning advice. With our deep knowledge and experience, we have assisted hundreds of clients build wealth through property investment.

Learn More
TOP