Financial support for business during Omicron outbreak
1. COVID-19 Support Payment introduced
Businesses struggling with revenue during the Omicron outbreak can apply for new targeted funding, as announced by the government on Monday 21st February.
Applications for the first payment open on February 28, with payments starting from March 1.
There will be 3 payments in total, available on a fortnightly basis. The new scheme is based on the understanding that the Omicron outbreak will pass over about 6 weeks. This scheme may be extended.
Each COVID Support Payment will be $4000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000. This is the same rate as the most recent Transition Payment.
Eligible Businesses must show a 40 percent drop in 7 consecutive days within the 6 weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to 7 days after that date.
2. Remittance of penalties and interest
Penalties and interest can be remitted for tax payments due on or after 14 February 2020 up until 24 March 2022 (including provisional tax). This will soon be extended to 7 April 2024.The best way for customers to take advantage of this is to set up an installment arrangement in their myIR account at ird.govt.nz
3. Small Business Cashflow Scheme (SBCS) changes
The following changes will be made to the SBCS before the end of March.
Base loan amount increased
The SBCS base loan will be increased to $20,000 (from $10,000). This means the amount that can be borrowed will be $20,000, plus $1,800 per full-time equivalent employee (up to 50 employees). The loan repayment period remains 5 years (60 months).
Interest-free period
The first 2 years of existing loans will become interest-free provided the loan is not in default. Interest will apply at a rate of 3% per year on the remaining loan balance from the first day of the third year of the loan period.
Existing borrowers can get a top-up loan
Existing borrowers who already have a loan (and have not defaulted on this loan) will be able to apply for a top-up loan. They can borrow an additional $10,000 plus any amount they did not borrow in their initial loan. The top up loan can be drawn down as a lump-sum or as up to 4 smaller instalments over time before the end of the scheme on 31 December 2023.
A borrower who receives a top-up loan will have 2 separate loans, each with their own 5-year loan term and 2-year interest-free period. For example:
first SBCS loan -interest-free for 2 years from the date the original loan was made available to them
top-up loan -interest-free for 2 years from the date of the first draw down. Any additional draw downs after this will not start a new interest-free period.
New loans
New SBCS borrowers, and those that have already paid back their loan in full before 31 December 2023, can borrow up to the new maximum amount as a lump sum or as up to 4 instalments before the end of the scheme. The first 2 years of the loan will be interest-free from the date the loan is made available to them (further draw downs do not start anew interest-free period).
Applying for the SBCS
The SCBS is open till 31 December 2023.
Customers can apply for the SBCS and the top-up loan in their myIR account at ird.govt.nz
