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New Zealand govt to provide $100,000 interest free loans to businesses

Published : Friday, 1 May, 2020 at 4:29 PM  Count : 363

New Zealand govt to provide $100,000 interest free loans to businesses

New Zealand govt to provide $100,000 interest free loans to businesses


After the banks fail to meet the government's expectations, the New Zealand government will provide interest-free up to $100,000 to small businesses that have jumped on the bandwagon.

Loans are available for one year and will be given to 50 or less full-time equivalent employees for the business.
However, businesses are only available to businesses whose income has exceeded 30 percent due to Covid-19.

In a statement, Finance Minister Grant Robertson appeared to be frustrated with the banks' decision to provide financial assistance to businesses affected by Kovid-19.

“It has become clear that the support we get from banks for our small and medium businesses does not meet their needs and our expectations as a government,” he said.

The scheme will provide $10,000 to each firm and 18 1,800 for an equivalent full-time employee.

This means that if a firm has three full-time equivalent employees, it will receive $15,400 - $10,000 as a base loan and $ 5,400 for three employees.

An organization with 50 full-time employees will receive a full $100,000 - $10,000 as a base loan and $90,000 for its 50 employees.

Robertson says the loans are interest-free if they are repaid in just one year

The interest rate will then be per cent for a maximum of five years. He has confirmed that there is no need to pay repayment for the first two years.

This money can be used for rent, insurance, utilities, supplier payments and rates, Robertson said.

However, dividends cannot go to shareholders or business owners through dividends.

Revenue Minister Stuart Nash said the project was designed to give small businesses access to cash flow to meet their scheduled expenses.

"We recognize that many businesses have little or no income through alert levels 4 and 3."

He said the terms of the loans are the same as for the wage subsidy scheme.

This means traders must be "effective" in Covid-19 and show that their income has been affected by at least 30 percent of the epidemic.

“Positions like these are not found anywhere else,” Nash said.

Roger Beaumont, chief executive of the New Zealand Bankers Association, welcomed the project.

"As a result of the industry's response, we welcome the simplification of their scheme rules by the Treasury. We hope this means more customers will be able to participate in this project in their long-term needs."

The scheme will be run by Inland Revenue who will accept applications from May 12 and pay for it soon, Nash said.

The government is also changing the criteria for the previously announced Business Money Guarantee Scheme, including removing the requirements of the General Security Agreement.-Internet

GY

Related Topics

Loans   Trading   New Zealand  








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