Small business cash flow loan scheme (SBCS)

One-off government loans are available for businesses and organisations impacted by COVID-19, including sole traders and the self-employed, to help with cash flow. Applications are open from 12 May to 12 June 2020 and can be made through myIR. Here’s an overview of the scheme. Detailed information can be found on the Inland Revenue website.

Eligibility

The SBCS is open to small to medium businesses with 50 or fewer full-time employee equivalents. This includes sole traders and self-employed businesses.

To get an indication of your eligibility, use the business.govt.nz SBCS eligibility tool. For a full list of detailed criteria, visit Inland Revenue (external link).

Loan terms and amount

Details of the loan include:

• $10,000 to be provided to eligible businesses

• an additional $1800 per full-time employee equivalent

• interest free if the loans are paid back within a year

• an interest rate of 3% for a maximum term of five years

• repayments not required for the first two years.

The maximum amount you can borrow depends on the number of full-time and part-time employees you have. If you are a business without employees, ie sole trader or self-employed, you can receive a loan of up to $11,800.

Inland Revenue has a calculator to help you work out how much you may be able to borrow.

You don’t have to accept the full loan amount you’re offered, and can decide to take a smaller loan.

If you received the wage subsidy, the number of employees you noted in that application will be applied to your SBCS application.

How to apply

Applications are open from 12 May to 12 June 2020 through myIR. Go to the I want to section, and select Apply for the small business loan.

If your businesses doesn’t have a myIR account, you will need to create one to apply.

Register a myIR account for a business or organisation

Most applicants will receive their loan payment in full from Inland Revenue within five working days.

Keep in mind you can only apply once and can’t change your application once submitted. So you may want to speak to your accountant or advisor before applying to make sure the loan is the best option for you. – all the above information is courtesy www.business.govt.nz

COVID-19 Temporary loss carry-back scheme

A temporary loss carry-back scheme has been introduced to support customers in the current uncertain economic environment.

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.

You must let us know if you are going use the loss carry-back scheme. You can do this in the ‘I want to’ section of your income tax account in myIR.

There are two ways to claim your loss carry-back:

Include the carried back loss in your tax return – we will automatically refund any overpaid tax.

Ask for a refund of any provisional tax you have paid for 2020 if you are going to carry back a loss from 2021.

We can refund some or all of the tax already paid for the preceding year before the loss year has finished by enabling customers to estimate their loss. Refunds will be processed a lot faster if you use myIR.

You do not need to rush to re-estimate your 2020 provisional tax. You can re-estimate up until when your return is filed or due. This gives more time to work out any estimated loss for the 2021 income year.

Shareholder employees of companies electing into the loss carry-back scheme also have up until when their return is filed or due to re-estimate their provisional tax.

If you do not elect to carry your loss back, it will still be available to carry forward as normal.

If you elect to carry back only part of the loss now, you can carry back the remainder anytime later in the year up until your return is due. Any balance remaining can be carried forward. -IRD