This is an oped written by Hon Stuart Nash, Revenue and Small Business Minister
OPINION: Zero is a good number if you are Dr Ashley Bloomfield. One billion dollars is a good number if you are the Minister for Small Business.
Small and medium enterprises (SMEs) have reacted enthusiastically to the new interest-free loans scheme in its first fortnight.
By late May around 60,000 businesses had applied for more than $1 billion in government loans, through their online Inland Revenue accounts. Around 95% have been approved and cash usually arrives within five days.
This is much-needed working capital for small businesses. For a variety of reasons they have not been able to approach banks or investors for support. Cash flow is crucial to kick-starting the economic recovery for SMEs. The government lending has come at just the right time.
A wide cross-section of businesses have applied. The most common are the construction industry, accommodation providers, professional firms, and retail. Most also got support from the Wage Subsidy. Ninety percent have ten or fewer staff. These are the typical small businesses that are the backbone of our economy and of our rural, provincial and urban centres.
Outside the big five main cities, there is strong interest from Tauranga, Whangarei, Rotorua, Napier, Palmerston North, New Plymouth, Nelson, Invercargill, Greymouth and Timaru.
Loans are interest-free if repaid within a year. After that the interest rate is 3% from the start of the loan, with a maximum term of five years. Repayments are not required for the first two years. SMEs employing 50 or fewer staff are eligible.
I urge business owners to talk to their bookkeeper, tax agent or accountant, or log onto the MyIR portal, to take advantage of government support as quickly as possible. Applications are due by 12 June but I am seeking advice on extending the deadline given the strong demand for the loans.
Combined with other measures, like the wage subsidy, tax refunds, drought relief for the primary sector, faster payments of small business invoices, and support for SMEs to move into e-commerce we have a substantial support package to help firms through this phase and into economic recovery. We will rebuild this country together.
Stuart Nash is Revenue and Small Business Minister.