It’s no secret that the years of COVID-19 restrictions and lockdowns were tough for many New Zealand businesses, just like they were for many businesses all around the world. If your business struggled, you might be looking to bounce back now that life is back to normal (a post-COVID-19 normal anyway). Read on to find out everything you need to know about government financial support schemes available, as well as other non-government financial support options.
What government financial support is available for businesses?
There are a range of government payments available to cover different scenarios, including:
- The Small Business Cash Flow Loan Scheme.
- Short-Term Absence payments.
- The Leave Support Scheme.
- The Events Transition Support Payment Scheme.
Let’s look at each payment in turn.
The Small Business Cash Flow Loan Scheme
The Small Business Cash Flow Loan Scheme provides loans to eligible small businesses and sole traders whose cash flow has been negatively impacted by COVID-19. The Scheme is available until the end of 2023. Up to $100,000 is available for businesses with less than 50 full-time staff (including sole traders). The loan is interest-free if paid back within two years, otherwise, an interest rate of 3% is charged. The maximum loan term is five years, and you don’t have to make any repayments for the first two years (but you obviously can if you want to and can afford it). To be eligible for the Scheme, your business must have had at least a 30% decline in your year-on-year revenue over a 14-day period during the last six months. You can apply for the Small Business Cash Flow Loan Scheme here.
Short-Term Employee Absence Payment
If your business employs staff (or you’re self-employed), a Short-Term Absence payment of $359 per person is available if:
- any of your staff (or you) have to stay away from work waiting for a COVID-19 test result, and
- working from home isn’t an option.
One payment is available per person per 30-day period. You can apply for the Short Term Absence Payment for your business here.
The Leave Support Scheme
If your business employs staff (or you’re self-employed), the Leave Support Scheme payment of $600 per week (for full-time workers) and $359 per week (for part-time workers) is available if:
- any of your staff (or you) have to self-isolate because of COVID-19, and
- working from home isn’t an option.
You can apply for the Leave Support Scheme here.
The Events Transition Support Payment Scheme
Hopefully, these days are behind us, but if your business runs any events that have to be cancelled due to COVID-19, this scheme covers reimbursement of non-recoverable costs. You can find out more about this Scheme here.
Non-government business finance options
There are also a range of non-government business finance options that have always been available. These options will continue to be available after all government schemes end. They include:
- business loans
- business credit cards
- business overdrafts.
Let’s look at each option in turn.
Business loans can be secured or unsecured. Secured loans have lower interest rates, but you need to provide an asset as security to get the loan approved. The lender can legally sell the asset to recover the amount you owe on a secured loan if you don’t make your repayments. They can’t do that with an unsecured loan. Business loans can usually be one of two categories:
- A line of credit that you can use up to a pre-set limit. You only pay interest on the funds you use.
- A term loan where you borrow an amount and pay it back over a set time period (plus interest) via regular repayments. Interest on a term loan can be fixed or variable.
Business loans can be used for a range of purposes, including upgrading assets and equipment, or helping to manage cash flow issues (which many businesses are experiencing right now!).
Business credit cards
Business credit cards are like personal credit cards. They are a revolving line of credit where you get a card that you can use for business purchases. Some business credit cards have interest-free periods of up to 55 days. If you pay off the full amount you spend during that time, you don’t pay any interest. Some business credit cards can also be linked to reward programs. This is handy if you’re looking to accumulate points as you spend, that can be cashed in for benefits.
A business overdraft is a short-term line of credit that can be used for unplanned expenses. It can be used at any time, and you’re only charged interest if you use it. Essentially, an overdraft allows you to overdraw your bank account and can be a great backup to have in times of cash flow issues.
It’s important to take advantage of any financial support you can get to help your business to survive and thrive. If you’re not eligible for any government initiatives, don’t stress, a business finance solution might be the cash flow saving grace you’ve been looking for.