Inland Revenue is urging small businesses, looking at applying for the Small Business Cashflow scheme, to do so quickly.
Inland Revenue administers the Government’s Small Business Cashflow scheme, handling loan applications, payment and repayments. The scheme has just 22 days to run until it stops on 12 June.
Inland Revenue spokesman Richard Philp says 47,318 businesses have already applied for the loans for small businesses struggling with loss of revenue due to COVID-19.
“The Small Business Cashflow [Loans] Scheme was successfully set up and implemented quickly. Applications opened on 12 May and in the first ten days Inland Revenue received and approved 45,290 (97 per cent),” Richard Philp says.
“That’s $784.9m in loans out the door, usually within a couple of days of being received and verified. 88 per cent of those loan applications were from people who also received the wage subsidy.
“It’s been done almost exclusively online with 99.8 per cent of all applications successfully made through Inland Revenue’s secure online service, myIR.
“Typically, it’s been very small businesses applying for the Scheme. 46 per cent of approved loans applicants have between 2 and 10 employees. And 43 per cent are sole traders with the business owner the only person working in the business.
“The Scheme ends on June 12, so it only has around three more weeks left to run. My advice is that any businesses wanting to apply for a loan should check out what information and documentation they need to apply, gather it together and apply online.
“Otherwise, they’ll run out of time,” Richard Philp says.
It’s essential that people fully understand the loan terms and conditions as set out in the loan contract which are available on IR’s website www.ird.govt.nz/covid-19.
“If there is information missing, that could be a reason for declining a loan application”, Richard Philp says.
“Also, if there are any facts or circumstances which have not been disclosed that make any information untrue, inaccurate or misleading, then this could cause a loan to default. A defaulted loan must be repaid immediately.
“The scheme has been developed and implemented by IR staff working from their dining room tables or temporary home offices. And they’ve briefed tax agents and accountants about it while working from home. I’m very proud of the work they’ve done.”
To be eligible for a loan, a business or organisation must have 50 or fewer full-time-equivalent employees and be eligible for the Wage Subsidy Scheme even if they have not applied for the subsidy. The business must also have a sound plan to be viable and ongoing, and it must hold information on file to verify this.
In most cases, businesses will be entitled to a loan amount of $10,000 plus $1,800 per full-time-equivalent employee, to a maximum of $100,000. Currently, the average loan amount approved is $17,331.22.
The loan has a five-year term and must be repaid by 31 July 2025. Businesses should speak with their financial advisors before applying.