The key criteria to providing these loans is proving business viability before a company can borrow funds.
The Government has also made changes to the criteria for the Business Finance Guarantee Scheme, including removing the requirement for a General Security Agreement.
The basic notes for the new lending process will be released in due course. Here are the key points to take away from this;
- The design of application forms and processes are still being completed, no doubt some forms should be available late this week
- Applications can be made from the 12th of May 2020
- IRD will administer and process applications for the loans.
- $10,000 will be the base loan amount
- Then you may borrow an additional $1,800, per full time employee (therefore you need 50 FTE employees to get the full $100,000)
- It says the loans are available to businesses with 50 or fewer FTE staff, we assume you can have more than 50 staff, if some of them are part time as long as the equivalent FTEs are not more than 50
- No repayments are required for the first two years
- The first year of the loan is interest free
- After the first year, the interest rate is 3% pa for a maximum of five years
- You need to have had a 30% revenue reduction/hit
- Can use it to cover Rent, Insurance, Utilities, Supplier Payments and Rates
If you want to consider taking this loan, check in with us before you start the application process. We can help run through the risks and rewards best suited to your business