Since the outbreak of COVID-19 in New Zealand, the Government has continued to evolve and grow its overall Support Package, including the wage subsidy, a redeployment package, a tax loss carry-back scheme, and small business financing schemes as well as additional funding to support small to medium sized businesses navigating the impacts of COVID-19.
The support packages for businesses have included an estimated $9 billion – $12 billion in wage subsidies, $2.8 billion in business tax changes to reduce cash flow pressure, a $100 million redeployment package to keep more New Zealanders in work, a $3.1 billion tax loss carry-back scheme, and a $6.25 billion Business Finance Guarantee scheme for small and medium-sized businesses. Additional measures include the Small Business Cashflow Loan Scheme which provides interest free loans for small businesses for a year, greater flexibility for affected businesses to meet their tax obligations, and $25 million in business consultancy support.
On 14 July the Government announced an additional $40 million of funding to be allocated nationally through the Regional Business Partner (RBP) programme, after the first round of $25 million was so successful. This additional funding has provided our nations SME community with the support required to navigate and survive the effects of COVID-19 on their businesses. This included specific funding to support businesses with access to specialist services. This was provided by the COVID-19 Business Advisory Fund and Tourism Transitions Fund. CEDA delivers the RBP Programme in Manawatū-Whanganui. Demand has been high across the country for support under these funds and CEDA has allocated the full provision of funding for the Manawatū-Whanganui region.
Businesses that require support or guidance can get in touch with the CEDA team today.
On 17 August, a further Government announcement outlined the Resurgence Wage Subsidy, providing an additional two-weeks of wage subsidy to businesses impacted by COVID-19. The announcement also included a simplified Leave Support Scheme, and an extension to the Mortgage Deferral Scheme through to 31 March 2021.
COVID-19 has created an unparalleled environment and the Government Support Package sets out to cushion the blow for both businesses and workers and has evolved to meet the challenging needs of our economy. This package is evolving to meet the challenging needs of our economy, with further changes and support expected to come.
Tax Relief and Cash Flow
Te Taake me te moni putea
Provisional tax estimates: You may be able to make an estimate or re-estimate of provisional tax, if your circumstances have changed due to COVID-19, with early refunds available where provisional tax has been overpaid.
Tax loss carry-back scheme: Businesses expecting to make a loss in either the 2020 year or the 2021 year can use that loss to offset profits they made the year before. In other words, they can carry the loss back one year to the preceding income year. This can be done before the loss year return is filed. See information on the scheme can be found here.
Cash Flow: It’s important to get in touch with your bank as soon as possible if you’re experiencing cash flow issues, or anticipate issues coming due to the COVID-19 situation.
Business Finance Guarantee Scheme:
On 25 March 2020, the Government announced the Business Finance Guarantee Scheme, for small to medium sized businesses. A term loan or revolving credit facility may be available if a business (which can be a company, sole trader, partnership or trust) needs credit for cashflow, capital assets and projects related to, responding to or recovering from the impacts of COVID-19. All New Zealand registered banks and non-bank deposit takers (non-banks) are eligible to apply to join the scheme. Current participants are:
- Banks: ANZ, ASB, BNZ, Heartland Bank, Kiwibank, SBS Bank, TSB, Bank of China and Westpac.
- Non-banks: Nelson Building Society.
Depending on the circumstances of a business, it may be able to access credit from either a participating bank or a non-bank, but not both. If a business borrows from a bank, it will determine the amount that can be borrowed and the length of the term, under one or more scheme loans up to a maximum of:
- $5 million, over five years
If a business borrows from a non-bank, it will determine the amount that a business can borrow and the length of the term, under one or more scheme loans up to a maximum of:
- $3 million, over five years
The scheme is open for applications until 31 December 2020. Further information can be obtained here.
Small Business Cashflow Loan Scheme (SBCS): On 1 May, the Government announced the Small Business Cashflow Loan Scheme. This scheme provides assistance of up to $100,000 to firms employing 50 or fewer full–time equivalent employees. The scheme will provide $10,000 to each qualifying firm and, in addition, $1800 per equivalent full–time employee. Loans will be interest free if they are paid back within two years. On 12 November, IRD announced that the restrictions on how the loan can be used have eased. As well as spending on core operating costs, businesses will be able to choose to use the loan to invest in their business, helping it to adapt to the impact of COVID-19. Furthermore, applications for the loan can now be made until 31 December 2023, an extension of 3 years.
Businesses and organisations can now apply for the SBCS loan through myIR. To do this, in the ‘I want to’ section of myIR, select ‘Apply for a Small Business loan’. Businesses without a myIR account will need to create one to apply for the SBCS loan. Further information and guidelines on contacting IRD for any assistance can be found here.
What if I need to make some of my employees redundant? The Ministry of Social Development has a guide for employers on COVID-19 related redundancies.
Is there assistance for employees made redundant? Yes, the MSD Benefit no longer has a stand down period in place. This means that those eligible to receive a benefit won’t have to wait if they’re unemployed due to COVID-19. They can apply online here. Processing times are normally 2-5 days, but due to increased demand are currently taking about 7-10 days.
Support with essential costs: For those that have lost their job, can’t work, or have experienced a reduction in income, they may be eligible for other financial help from Work and Income (MSD).
Six Month Mortgage Holiday Available: The additional support package announced on 25 March outlines a 6-month mortgage holiday for all those that fit the criteria. Check your banks website for details.
Further FAQ’s for employers can be found here on the Ministry of Social Development site.
Support for Māori communities and businesses
Tautoko me nga Iwi Maori me te Pakihi Maori
The government has developed a plan to support Māori communities and businesses in the face of COVID-19, with a whole of government approach to providing health, social and economic support tailored to meet the specific needs of Māori. This will include:
- Refocusing of Te Puni Kokiri Regional Hubs to support whānau, hapu and iwi
- A whānau Māori Community and Mārae package reprioritising $10 million from the Māori Development vote to support community outreach
- Māori Health and Whānau Ora response with $30 million targeted directly to Māori Health services and an extra $15 million to Whānau Ora commissioning agencies
- Supporting Māori Businesses and engaging with Māori with $1 million of funding to enable a needs assessment for Māori businesses, and $470,000 to Te Arawhiti to engage and work with iwi on their COVID-19 pandemic response plans.
To find out more about the support available, please contact firstname.lastname@example.org.
CEDA will be delivering a series of free webinars for businesses affected by the COVID-19 pandemic. These webinars will be delivered in partnership with our service providers, and funded by New Zealand Trade and Enterprise.
CEDA’s team are here to support you and help answer any questions you may have.
We recognise that the level of information is significant, and rapidly changing each day. Get in touch so we can help guide you through the different supports available to you and connect you with the resources you need.
Our dedicated team of Business Growth Advisors can connect you to the right information and resources to assist you in navigating this unprecedented time for your business. Ways we can help include:
- Connecting you to professional service providers to assist you with the issues that you are facing e.g. cash flow management, business continuity management,
- Provide you with relevant and up to date information on how and where to access Government support including navigating the Wage Subsidy Scheme, and the recently announced Business Finance Guarantee Scheme.
- Assist Māori businesses on Government support available.
- Provide you with an experienced Business Mentor to provide additional guidance over the next 12 months. Business Mentors come with specific skills and are matched depending on your needs.
- Facilitate funding for Research and Development including project grants.