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Inland Revenue (IR) is warning the many businesses yet to repay money borrowed via the Small Business Cashflow (SBC) loan scheme that they'll face 10.88% default interest from next month.
The SBC was launched in May 2020 to help out businesses affected during the pandemic. Up to $100,000 was potentially available via unsecured loans for businesses with 50 or fewer full-time staff. The loans were interest free if repaid within a year. Thereafter an interest rate of 3% has been charged for a maximum term of five years, with repayments not required for the first two years.
In a statement, IR said Monday (May 12) marked the fifth anniversary of the scheme and therefore the point at which loans should be paid off.
More than 129,000 businesses were issued loans totalling $2.4 billion, with an average amount approved of $17,000.
IR said most loans were taken out in the first few months of the scheme, with a five-year repayment period, so many "are now reaching their cut off point".
As of April 30, 2025, loans had been repaid in full by 64,000 people.
However, a total loan balance of $853 million is still owing. IR says approximately 14,300 customers' loans are already in default, owing just over $242 million.
"IR is actively taking steps to recover these defaulted loans."
From next month, IR will default a loan if it has not been paid off.
"Default interest (calculated based on use of money interest of 10.88% plus standard interest rate of 3%) will be charged."
IR is also alerting customers who are behind on their repayment plan and remind them that repayment is needed.
"Since February this year we’ve tried to contact more than 1,500 customers who have defaulted loans and tax debt. As a result, we’ve recovered almost $10 million of SBC and tax debt from these customers.
"Almost 20% have entered into an arrangement to pay the debt; 30% had a deduction notice placed on their debt to collect it directly from their bank account and 33% have made lump sum payments.
"We are also reiterating that there are consequences, such as default interest being added to the balance and legal action, if the loan remains unpaid."
The statement said customers can also check their loan balance, repayment plan and make payments in their myIR.
For any changes to a repayment plan or any changes in circumstances, customers can also contact IR through the secure channel in their myIR account to discuss options.
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