The Government’s announcement on May 1 of interest free loans for a year to small businesses impacted by COVID-19, together with the tax reforms providing more than $3 billion in tax relief, will provide much needed support for small business, says Canterbury Employers’ Chamber of Commerce chief executive, Leeann Watson.
The Small Business Cashflow Loan Scheme will provide assistance of up to $100,000 to firms employing 50 or fewer full-time equivalent employees.
The scheme will provide $10,000 to every firm and in addition $1,800 per equivalent full-time employee. Loans will be interest free if they are paid back within a year.
The interest rate will be three percent for a maximum term of five years. Repayments are not required for the first two years.
“These announcements will provide welcome relief to many businesses across all sectors,” Leeann says.
“It shows that central Government is receptive to the needs of businesses during this incredibly challenging time, with tax and cashflow both key concerns for businesses.
“Crucially, the urgency in which these packages have been developed and passed through Parliament is important to ensure businesses are supported when they really need it.
“We know that the cost of compliance is significant for small business and in addition to covering their existing overheads they now face increased costs of meeting strict health and safety requirements under COVID-19.
“Cashflow has always been a pain point for businesses, particularly small businesses, which has been compressed by the significant reduction in trade for most businesses during lockdown and during Alert Level 3.
“By increasing their access to cash, the Government is greatly increasing their ability to not only survive but thrive.
“We applaud the Government for demonstrating bold, decisive leadership to support businesses during this time.” Leeann says the timing of a transition to Alert Level 2 is also critical.
“Businesses have demonstrated how focused and determined they are to return to operations, by taking on-board their responsibility around our country’s health response and dramatically changing their way of working—and core offering in some cases—to adhere to the guidelines.
“I have no doubt this would continue in Alert Level 2, which would crucially enable some of our most vulnerable businesses, such as those in the hospitality sector, to take their first steps on their recovery journey.”