Government measures in key jurisdictions 4th edition - Flipbook - Page 89
New Zealand
Contributor: Duncan Cotterill
Loans and
financial
support
Has the
government put in
place any new
bank funding
schemes?
Richard Smith | richard.smith@duncancotterill.com | +64 21 905 510
Malcom Harrington | malcolm.harrington@duncancotterill.com | +64 21 274 0321
The Business Finance Guarantee Scheme is being offered by the Government alongside private
banks to help provide temporary financial support to businesses.
This scheme is available to small to medium-sized New Zealand business (those with annual
turnover of up to $200 million) facing temporary financial stress due to COVID-19, for a short-term
bridging loan from a bank. Originally available for loans of up to $500,000, from August
2020 this was extended to permit loans up to $5 million. The Government will carry 80 percent
of the credit risk for the scheme, to encourage lending. Loans are otherwise on commercial terms.
Loans may be applied for under the scheme until 31 December 2020. Details of the Business
Finance Guarantee Scheme are available here.
In addition, the Government has established a Small Business Cashflow Loan Scheme, to provide
assistance of up to $100,000 to firms employing 50 or fewer full-time equivalent employees. The scheme
is also available to sole-traders and the self-employed. Applications for a loan under this scheme
may be made until 31 December 2020.
The Scheme provides loans of up to $10,000 to every firm and an additional $1,800 per equivalent fulltime employee. These loans will be interest free if they are paid back within a year. After that the
interest rate will be 3% for a maximum term of five years. Repayments will not be required for the first
two years of the loan. Details of the Small Business Cashflow Loan Scheme are available here.
Employment
What
financial support
is the government
providing to
businesses and to
individuals on
employment
issues?
The Government established a Wage Subsidy Scheme, providing payments for each employee for
twelve weeks. Businesses would qualify for the payment if they experienced a 30 percent loss of income
attributable to Covid-19.
An employer also had to agree to use best endeavours to pay the employees named in the application at
least 80 per cent of their usual wages or salary. If that isn’t possible, employers need to pay at least the full
amount of the subsidy to the employee. The original Wage Subsidy Scheme ended in June 2020.
Details of the Wage Subsidy Scheme are available here.
The Wage Subsidy Extension is available to employers, including sole traders, who are still significantly
effected by Covid-19 after the Wage Subsidy Scheme ended in June 2020. The obligation to pass on the
subsidy remains the same, but to be entitled to the extension a business must show that they have suffered,
or expect to suffer, a revenue loss of at least 40% (reduced from an original 50%) for the 30 days prior to the
application date, compared to the closest period last year.
The Wage Subsidy Extension is available to cover employee’s wages for eight weeks. Applications for this
scheme expire on 1 September 2020.
Details of the Wage Subsidy Extension are available here.y
As a result of a resurgence of COVID-19 in August 2020, an additional Resurgence Wage Subsidy payment is
available for employers, including self-employed people, who are financially effected. To qualify, a business
must show that they have had, or expect to have, a revenue drop of at least 40% because of COVID-19, for a 14
day period between 12 August to 10 September 2020.
Applications for the Resurgence Wage Subsidy are open from 21 August 2020 until 3 September 2020.
Details of the Resurgence Wage Subsidy are available here.
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Government measures in key jurisdictions