New Zealand: Inland Revenue to administer small business loan program (COVID-19)
New Zealand: Small business loan program (COVID-19)
A small business cash-flow loan scheme (program) is one governmental response to the coronavirus (COVID-19) pandemic.
The administrative mechanics of the loan program are included in the COVID-19 Response (Taxation and Other Regulatory Urgent Measures) Act 2020 that was passed yesterday.
Inland Revenue will administer the loan program. Key features of the loan program include the following:
- Loans are provided for up to $100,000* to firms employing 50 or fewer full-time equivalent employees (the loan amount is calculated as $10,000 for an applicant plus $1,800 per full-time employee).
- Eligibility criteria are:
- The wage subsidy scheme criteria, plus
- A declaration that the business is viable and will use the money for core business operating costs.
- The business and Inland Revenue will have a legally binding loan contract.
- The loan will be for a maximum five years, with repayments not due in the first two years.
- No interest is charged if the loan is repaid within the first year. A 3% interest rate applies otherwise.
- Inland Revenue will administer and audit the loan program.
- Applications to participate in the program open 12 May 2020.
The legislation passed yesterday contains specific provisions relating to administration of the loan program. A decision to grant (or decline) a loan will not be disputable and information can be shared with the Ministry of Social Development (the agency administering the wage subsidy).
Read a May 2020 report prepared by the KPMG member firm in New Zealand
*$=New Zealand dollar
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