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Small Business Cashflow Loans - Changes Announced Nov20


  • The Government announces a three-year extension of the application time for the Small Business Cashflow Loan Scheme, and a doubling of the interest free period.
  • Applications for the scheme were due to close at the end of 2020.
  • Other changes include repayment provisions and what loans can be used for.

The first Cabinet decision of the new Labour Government was a three-year extension of the Small Business Cashflow Loan Scheme, and a provision of up to two years interest free, to support small businesses.

Applications for the scheme were due to close at the end of 2020. They now close on 31 December 2023.

Other changes include:

  • Currently no interest is charged if the loan is repaid within one year. This will be increased to two years with loan balance to be repaid within that period.
  • Currently the loan can only be used for core operating costs. This will be broadened so that the loan can be used, for example, on capital expenditure.

These changes will be made by Inland Revenue unilaterally, changing the terms and conditions of new and existing loan contracts.

IR says it does not have a date for when this will happen, but it will be by 31 December 2020.

It says that "At this stage, all other aspects of the loan scheme remain in place".

These include:

The scheme being available to businesses with 50 or fewer full-time-equivalent employees.

Businesses must have been in business on 1 April 2020 and have experienced a 30 percent decline in revenue as a result of COVID-19 restrictions.

The maximum amount that can be borrowed is $10,000 plus $1,800 per fulltime-equivalent employee and only one amount can be drawn down.

The loan period is for five years. Where the loan is not fully repaid in the concessionary interest free period, the interest rate is 3 percent from the date of the loan being provided.

IR says the Government has asked for advice on some of these existing aspects of the loan scheme, so further changes may happen at a later stage. Announcing the extension, Prime Minister Jacinda Ardern said "With access to the last round of wage subsidy coming to an end, it is important viable businesses who need cashflow support can access it as they recover.

"Different businesses may need to access the scheme at different times, so it's important it remains as a backstop for them to fall back on if times get hard."

To date nearly 100,000 businesses have received a Small Business Cashflow Loan, with total lending of $1.6 billion. The average value of each loan has been around $17,000.

If you need help to apply for this please let us know and we can help direct you around the IRD website to make the application.