It has been designed to provide short-term credit to help protect the solvency of small and medium-sized New Zealand businesses that have been affected by the Covid-19 outbreak.
The scheme will guarantee loans up to a limit of NZ$500,000 and can be extended to New Zealand businesses who have a turnover between $250,000 and $80 million per annum.
The loans will be for a maximum period of 3 years however the scheme provides for a six-month holiday for both principal and interest payments. There is an expectation that the loans which will be provided by the retail banks, will be available at competitive rates.
The interest for that 6 month holiday period would accrue.
The assistance package is to provide support for New Zealand businesses to help them maintain solvency. The government is continuing to increase the assistance available to businesses so that they can continue to pay their bills helping to keep other New Zealand businesses solvent.
Banks are expected to announce the specific details over the next few days.
This latest support will be by way of the New Zealand government using its balance sheet to carry 80% of the credit risk with the banks being exposed to the remaining 20%.
The early indications are that, as banks are carrying 20% of the credit risk, they will require financial statements so that they can complete the due diligence required before extending the facility.
With most 2019 income tax returns now lodged as part of our extension of time arrangements with Inland Revenue, we are well resourced to assist with a quick turnaround of financial statements.
Please let us know if you would like our assistance with this or any other application.
Help For New Zealand Employees With A Morgage To Pay
As part of the NZ Government initiative, homeowners who have had their jobs impacted by the Coronavirus outbreak will also be entitled to a six-month mortgage holiday.
It is hoped that this will mean less stress on the household budgets of employees who have been impacted.
Availability Of Capital
As part of the stimulus package, the Reserve Bank is reducing the “core funding ratios” from 75% down to 50% as a means of ensuring there is plenty of cash flowing in the New Zealand economy which, it is expected, will help to control lending interest rates.
You can give us a call on 1300 791 600 for a quick chat.
The information in this article is indicative of NZ tax rules and changes and not intended to be complete for all intents or purposes and does not constitute advice. It is recommended that you obtain professional advice, suited to your particular circumstances, from us before acting on anything you read.