The Government has announced new financial support for businesses affected by the Omicron outbreak.
- A new COVID support payment of NZ$4,000 per business plus NZ$400 per full time employee up to 50 full time employees (i.e., capped at NZ$24,000) if they have suffered a 40% revenue reduction.
- An extension of the Small Business Cashflow Loan Scheme to allow firms a further “top up” loan of NZ$10,000.
Our quick take
We welcome the announcement of additional financial relief for impacted businesses. While the new COVID Protection Framework does allow a greater range of businesses to operate (albeit with some restrictions), the Red Traffic Light setting has had a disproportionate impact on certain sectors (such as hospitality).
Rather than targeting specific sectors, however, the Government’s approach is again modelled on revenue reduction, which was a feature of previous COVID financial support schemes – the Wage Subsidy, Resurgence Support Payment (RSP), and Transition Support Payment (TSP). Like the RSP and TSP, the payment will be administered by Inland Revenue.
The revenue decline measurement period for this latest support payment will be seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on 15 February 2022, compared to seven days after that date. Applications will open on February 28 and the payment will be available fortnightly for up to six weeks. The total payment period appears to be based on international experience around the length of Omicron outbreaks and peaks. The Government’s announcement does note that there is the option to extend the payment period, if required.
Inland Revenue is also responsible for administering the Small Business Cashflow Loan Scheme, for businesses with 50 or fewer full-time employees that have experienced at least a 30% revenue decline (measured over a 14-day period). The maximum loan available (prior to this latest announcement) was NZ$100,000 (i.e., NZ$10,000 per business plus NZ$1,800 per full time employee up to 50 FTEs). Loans under the scheme have a repayment period of five years, with no interest if the loan is repaid within two years.