Wage subsidy & small business loans scheme - New details and deadlines
The Government has announced a criteria change to the Wage Subsidy Extension Scheme and an extended application deadline for the Small Business Loan Scheme.
The Small Business Cashflow Loan Scheme
Businesses that are struggling due to a loss of actual or predicted revenue as a result of Covid-19, can apply for loans of $10,000 plus $1,800 per full-time-equivalent employee.
The scheme is available for businesses with 50 or fewer employees.
The annual interest rate will be 3% beginning from the date of the loan being provided. However interest will not be charged if the loan is fully paid back within one year. Inland Revenue will administer the payments and repayments of this scheme.
The application deadline for this scheme has been extended from June 12 to July 24.
Read more on the terms and conditions on the IRD website
The Wage Subsidy Scheme
The existing wage subsidy scheme allows you to apply to cover the wages of your employees over a 12 week period. You can't apply for the same employee twice. The current scheme is for businesses that have had a 30% revenue drop attributable to the COVID-19 outbreak. Business that receive the subsidy must:
- Use best endeavours to pay at least 80% of each named employee's normal wages or salary for the duration of the subsidy
- Pass on at least the full amount of the subsidy claimed, to the employee
More details on eligibility and obligations are on the Work and Income website.
Applications for the wage subsidy scheme close on 9 June 2020.
The Wage Subsidy Scheme Extension
The wage subsidy scheme is being extended for businesses that have experienced a 40% decline in revenue. (The Government announced a change in criteria from a 50% revenue drop).
The period needs to be a continuous 30 day period in the 40 days before application (but no earlier than 10 May 2020) and must be compared to the closest period last year. The extension provides a further 8 weeks of payments for employers and self-employed individuals who meet the eligibility criteria.
If you're applying for an employee you've already applied for the Wage Subsidy for, you can't apply for them until their 12 week Wage Subsidy has finished.
Applications for the extended scheme are not open until 10th June and will close on 1st September.
If you are looking to apply for the wage subsidy or a cashflow loan, talk to us.
We can help you prepare the figures for your applications.