More small businesses eligible for interest-free loans under government cashflow scheme

More small businesses will be eligible to take out interest-free loans under the government Small Business Cashflow Loan scheme, with $42m already claimed in Hawke's Bay alone. Photo / File

More small businesses will be eligible to take out interest-free loans under a government cashflow scheme, with $42m already claimed in Hawke's Bay alone.

Almost 2500 small and medium enterprises (SMEs) across the region have claimed funding under the Small Business Cashflow Loan scheme – making up 2 per cent of the loan recipients nationwide.

Small Business Minister Stuart Nash and Revenue Minister David Parker announced the Small Business Cashflow Loan scheme was to be extended for three years and the interest-free period for two years.

Parker said the extension will enable more businesses to prosper.

"There are encouraging signs for our economy, but the global economic outlook remains uncertain," he said.

"The scheme provides a backstop for small and medium businesses."

So far, 100,000 SMEs have drawn on the Government's support to the tune of $1.6b – including 2494 in Hawke's Bay.

About 6500 SMEs have already made more than $45.5m in repayments.

Nash said the decision to extend the scheme is designed to give confidence to the smallest businesses and keep up the momentum of recovery post-Covid.

About 82 per cent of loans were to micro businesses with between one and five employees, while 92 per cent were to firms with 10 of fewer staff.

The majority of loans have been granted to SMEs in construction and building (17 per cent), accommodation, restaurants and cafes (12 per cent), those offering professional, scientific or technical services (10 per cent), retail trade (9 per cent), and manufacturing (7 per cent).

Nash said cashflow support for SMEs has been central to government efforts to accelerate the economic recovery and sustain businesses and jobs.

"As the economy moves into recovery and rebuild, we're also broadening the eligibility criteria so more businesses can access support," he said.

Businesses established after April 1, 2020, which have existed for six months, will now be eligible for a loan.

"We're also changing the requirement that a business must have experienced a decline in actual or predicted revenue of at least 30 per cent in any 30-day period from January to June 2020, compared with the same period in the previous year," he said.

Firms are also eligible for a second loan, if they meet the criteria and have repaid the original loan in full.

The expanded eligibility criteria come into effect in February 2021.