Is your business maximising the Small Business Cashflow (Loan) Scheme?
Recent changes have made this scheme even more useful than before.
Early last year the government announced the Small Business Cashflow (Loan) Scheme (SBCS) in response to the expected business downturn caused by Covid-19. The scheme is administered by Inland Revenue and provides small and medium businesses with loans of up to $10,000 plus $1,800 per full time employee. Interest is not charged on the loan provided it is fully repaid within 2 years.
Unlike some of the other Covid-19 support schemes, the SBCS has so far proved successful and free of controversy. By December 2020, over 100,000 businesses had made use of the SBCS to access around $1.6 billion of loans.
Extension and expanded eligibility
The government appears eager to build on the early success of the SBCS and in December 2020 it announced the following changes:
· Applications can now be submitted up to 31 December 2023
· New businesses established after 1 April 2020, which have existed for six months, will now be eligible
· Businesses need only demonstrate a drop in revenue of 30% over any 14-day period compared to the same period a year ago
· The loan can be used for investment in new equipment or digital infrastructure, and not just for core operating expenses
· Businesses can draw down a second loan, provided they have repaid the original loan
Like the original scheme, to access the SBCS a business must be viable, which may require a cash-flow forecast or accountant’s assessment.
With the expanded eligibility criteria coming into effect from February 2021, it is worth taking a second look at the SBCS to see if your business could benefit. As we kick off a new year, now is a good time to set out your business goals and projections for the next 12 months; and the availability of interest-free business funding could be a key factor to help achieve them.