COVID-19 Business Relief Options announced by the Government have recently been extended for any New Zealand business that is currently facing a financial hardship. Read on to find out what relief option your business might qualify for.
Insolvency relief for companies impacted by COVID-19
The Government introduced new legislation to make changes to the Companies Act to help businesses facing insolvency due to COVID-19 to remain viable, with the aim of keeping New Zealanders in jobs.
COVID-19 Business Finance Guarantee Scheme
The Government launched a Business Finance Guarantee Scheme for small and medium-sized businesses, to protect jobs and support the economy. The Crown, in partnership with participating approved banks, will support targeted new loans (including increases to existing limits) to eligible businesses, as a response to difficulties caused by COVID-19. Under the scheme, businesses with annual revenue up to $200m can apply to their banks for loans up to $5,000,000, for up to five years.
The scheme is open for applications until 31 December 2020
The purpose of these loans is to help New Zealand businesses facing hardship as a consequence of COVID-19 to do one or more of the following:
- To respond to the impacts of COVID-19;
- To position themselves for recovery from the impacts of COVID-19; or
- To recover from the impacts of COVID-19.
- Maximum loan per eligible business up to $5,000,000.
- The loan is for a maximum of 5 years and must be repaid over this time period.
- Please note this is a loan and will add to the costs of running your business. As with any other loan, you remain responsible for repaying 100% of the loan and interest. You should not apply for an amount that you cannot afford to repay.
The Business Finance Guarantee Scheme cannot be used for
- Distribution of dividends or on-lending outside the customer’s guaranteeing group
- Refinancing more than 20% of your existing debt with us. There are certain exceptions to the 20% limit
Business Finance Guarantee Scheme Loans are not available to:
- a local authority, a council-controlled organisation or a council organisation for the purposes of the Local Government Act 2002; or
- anyone who is classified by us in the follow categories: residential property investor or developer and commercial property investor or developer.
- The manufacture or distribution of recreational cannabis
- The processing of whale meat
- The manufacture of cluster munitions, anti-personnel mines, tobacco, and civilian automatic and semi-automatic firearms, magazines or parts
- The manufacture or testing of nuclear explosive devices
- Any activity which is illegal in New Zealand