Extension of Wage Subsidy and Small Business Cashflow Loan

Column by He Waka Eke Noa supplier member Dave Saunders of Aro Advisers Ltd.


Wage subsidy moves to 40% reduction in revenue

The eligibility criteria for the next round of the wage subsidy has been widened to include more businesses.


The second round of subsidy was initially going to have the following requirements: a 50% reduction in revenue loss over the 30 days prior to applying.  It was our view that this is a very narrow set of criteria.  This has now been widened to a 40% loss over a 30-day period in the 40 days prior to applying.  The second round of wage subsidy opens up on the 10th June.


This is good news for businesses that were just outside the criteria, particularly for those in the hospitality industry; many of whom have worked hard to modify their business practices to fit in with level 3 and 2 requirements, which resulted in their turnover crossing the 50% threshold.  Perversely, this could have made them worse off as they were going to be outside the subsidy bracket – but this change will now include more of these businesses. Find out more here.


A 40% hit in revenue is still very significant and will undoubtedly be causing some pain for these businesses, but this subsidy might be a lifeline to help some hold on while we move to level 1.


More time for Small Business Cashflow Loan Scheme

It’s fair to say that there has been a significant uptake of the Small business Cashflow Loans that are provided via IRD.  Roughly 70,000 businesses have accessed this to date – markedly more than have accessed the government secured bank loans.


Initially, applications for these loans were only open from 12 May to 12 June.  However, the deadline has now been extended to the 24th of July.


As a recap:

  • these loans are administered by IRD
  • the amount you can borrow equals $10,000 + $1,800 per full time equivalent employee
  • they are interest free if repaid within 12 months otherwise 3% interest rate and a 5-year term.

These are better terms than most businesses can access via their bank and are far less administration to apply.  Because of this, our advice to businesses has been this: if you have funds borrowed OR don’t have a sufficient ‘cash cushion’ for what is sure to be a turbulent year ahead, it is worth looking at these loans – even if you don’t need it immediately.  However, one word of caution; these are loans, the do need to be paid back!  Find out more here.


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