The government has unveiled an interest free loan scheme to assist small businesses impacted by the COVID-19 economic shock. It hopes this will meet the immediate cashflow needs of these businesses by helping them pay for fixed costs.
The scheme will provide small businesses with an interest free loan of up to $100,000. The loan will be interest free for the first year, then interest will be charged at 3 percent for a maximum term of 5 years. No repayments will be required for the first 2 years.
A firm is eligible for $10,000 loan plus $1,800 additional loan per full time employee. For example a firm with 20 employees will be eligible for $10,000 + ($1,800 x 20) = $46,000
The loan is to be used for core operations such as paying rent, insurance, utilities and suppliers however it cannot be passed through to shareholders or owners of the business through dividends.
Detailed eligibility criteria not been released at the time of writing however it is expected that businesses applying would be viable and would have survived through level 4 and level 3, however experienced a decline in revenue of 30 per cent or more.
Applications for the scheme can be made from 14th May 2020, and it will be administered by the Inland Revenue Department.
Contact us if you require assistance with your loan application.