Hi All

Last Friday the Government announced a new 12-month interest-free loan product. Starting loans range from $10,000 up to a maximum of $100,000 for small businesses with less than 50 FTEs!

If you want to consider taking this loan, please review the known criteria below and check with us before applying, so we can run through the risks and rewards with you.

A key criteria to providing these loans is proving “business viability” before a company can borrow funds, we are waiting to see how this will be assessed.

The Government also made changes to the criteria for the Business Finance Guarantee Scheme, including removing the requirement for a General Security Agreement.

The basic notes for the new lending process will be released in due course.

• The design of application forms and processes are still being completed, no doubt some forms should be available late this week
• Applications can be made from the 12th of May 2020
• IRD will administer and process applications for the loans.
• $10,000 will be the base loan amount
• Then you may borrow an additional $1,800, per full time employee (therefore you need 50 FTE employees to get the full $100,000)
• It says the loans are available to businesses with 50 or fewer FTE staff, we assume you can have more than 50 staff, if some of them are part time as long as the equivalent FTEs are not more than 50
• No repayments are required for the first two years
• The first year of the loan is interest free
• After the first year, the interest rate is 3% pa for a maximum of five years
• You need to have had a 30% revenue reduction/hit
• Can use it to cover Rent, Insurance, Utilities, Supplier Payments and Rates

Click here for the articles (1 min to read):
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12328900
and
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12328961

Disclaimer – While all care has been taken, Johnston Associates Chartered Accountants Ltd and its staff accept no liability for the content of this newsletter; always see your professional advisor before taking any action that you are unsure about.