Hello Valued Clients
Just touching base to advise we will be back on deck operating from our office from Monday 18th May.
Until then we are still available by email or phone.
If you are considering applying for the Government Small Business Loan and are unsure of the requirements, including having evidence your business is viable and ongoing that inland Revenue can use for audit purposes, please contact us and we can discuss this with you.
COVID-19 small business cash flow loan
Amendments to the Tax Administration Act 1994 and the Income Tax Act 2007 by the enactment of the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act (No 10 of 2020) on 30 April 2020 authorised the Commissioner of Inland Revenue on behalf of the Crown to lend money under the Small Business Cashflow (Loan) Scheme (SBCS).
The SBCS was introduced to support businesses and organisations struggling because of loss of actual or predicted revenue as a result of COVID-19. They must have 50 or fewer full-time-equivalent employees.
Organisations and small to medium businesses, including sole traders and the self-employed, may be eligible for a one-off loan with a term of five years if they have been adversely affected by COVID-19. The maximum amount loaned is $10,000 plus $1,800 per full-time-equivalent employee. The maximum loan is $100,000. Sole traders can receive a loan of up to $11,800.
Applicants have the option to accept the full loan amount offered or a smaller loan. However, only one loan application can be made and no amendments can be made after the loan has been applied for.
The annual interest rate is 3% beginning from the date of the loan being provided. Interest will not be charged if the loan is fully paid back within one year.
Eligible businesses and organisations
A business or organisation is eligible for the SBCS loan in any of the following circumstances:
· if you included all your employees in the wage subsidy application, you are eligible for the SBCS loan if your wage subsidy was $351,480 or less (this equates to 50 full-time employees)
· if you have received the wage subsidy only for some of your employees, or
· if you did not apply for the wage subsidy but are eligible for a wage subsidy of $351,480 or less if you were to apply for all your employees.
Commonly owned groups of business and organisations will be treated as a single firm when applying the eligibility cap of 50 full-time-equivalent employees and for the purposes of assessing the available loan amount.
Applying for the SBCS loan
Inland Revenue will administer the payments and repayments of this scheme. Applications are open from 12 May 2020 to 12 June 2020 inclusive.
Businesses and organisations are able to apply for the SBCS loan through myIR. In the "I want to" section of myIR, select "Apply for a Small Business loan". Businesses without a myIR account will need to create one to apply for the SBCS loan.
In order to apply for the SBCS loon, applicants will need to do the following:
· provide their New Zealand Business Number (NZBN) – businesses and organisations without an NZBN will need to obtain one before applying for the loan
· confirm their business or organisation is experiencing a minimum 30% decline in actual or predicted revenue from January 2020 to June 2020 as defined in the wage subsidy scheme
· confirm their business or organisation existed before 1 April 2020
· confirm their business or organisation is viable and ongoing, have a plan to ensure it remains viable and ongoing, and there is evidence Inland Revenue can use to check this
· confirm the loan will be used to pay for core operating costs (including, but not limited to, rent, insurance, utilities, supplier payments, or rates)
· confirm the loan will not be passed through to the shareholders or owners of the business or organisation, for example, by a dividend or a loan to the shareholders or owners
· confirm they have the appropriate authority to commit their business or organisation to this loan
· confirm they are 18 years or over and have the legal right to apply for the loan