Government measures in key jurisdictions 5th edition - Flipbook - Page 92
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 shortterm 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 30 June 2021. 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 2023.
The Scheme provides loans of up to $10,000 to every firm and an additional $1,800 per
equivalent full-time employee. These loans will be interest free if they are paid back within
two years. 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 suppo
rt 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.
After the original scheme expired, the Government made a Wage Subsidy Extension available
to employers, including sole traders, who were still significantly effected by Covid-19 after the
Wage Subsidy Scheme ended in June 2020. The obligation to pass on the subsidy remained
the same, but to be entitled to the extension a business had to show that they suffered, or
expected 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 covered employee’s wages for eight weeks. Applications for this
scheme expired on 1 September 2020.
Details of the Wage Subsidy Extension are available here.
As a result of a resurgence of Covid-19 in August 2020, an additional Resurgence Wage
Subsidy payment was made available for employers, including self-employed people, who were
financially effected. To qualify, a business must show that they have had, or expected 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 were 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
