Cabinet has agreed to make the Small Business Cashflow Loan Scheme accessible for a longer period of time.
Businesses will now have until December 31, 2023 to apply for unsecured loans under the scheme, administered by the Inland Revenue Department. The deadline was previously December 31, 2020.
The interest-free period of loans under the scheme will also be extended from one year to two years.
And the criteria for what the loans can be used for will be broadened beyond core business operating costs to capital items.
Labour campaigned on these changes ahead of the election.
Under the Small Business Cashflow Loan Scheme, “viable” businesses can get a $10,000 loan. The size of the loan can be extended by $1800 for every full-time equivalent employee the business has up to 50 employees. So, the maximum available is $100,000.
Finance Minister Grant Robertson said that before the end of the year, Cabinet would consider allowing businesses that have repaid their loans to take out another loan under the scheme, increasing the cap to make larger loans available and/or adjusting the eligibility criteria.
Robertson said legislation would be required for some of these changes.
Loans are subject to 3% interest when the interest-free period expires. This interest is charged from the date the loan is drawn down.
Loans need to be repaid within five years of them being taken out.
Close to 100,000 businesses have received a loan under the scheme to date, with lending totalling $1.6 billion. The average value of each loan is $17,000.