Congratulations on returning to Level 2 and to all of those that were able to have their first day of trading .. congratulations. We have decided that we will continue to work from our homes and utilise technology to have meet ups with you via phone or video calls. So please contact us via email if we can be of assistance.
So today’s email is to update you on:
- more details on the criteria and rules around the Small Business Cash Flow Loan
- what to pay employees
- 2020 Budget
Small Business Cash Flow Loan Scheme (SBCS)
Today we received some more details on the application process for applying for the loan.
Here are some things to watch out for –
- you will need a NZBN number. If you are a company, you already have one and it can found by searching your company on the Companies Office website www.companies.govt.nz. If you don’t have one then you will need to apply here www.nzbn.govt.nz
- there is a question for you to confirm that the loan will only be used for core operating costs such as rent, rates, power, suppliers etc. This implies that the loan cannot be used to refinance more expensive debt that the business already has. It is untested if you answer no to this question whether the application still proceeds.
- another question for you to confirm that the loan will not be passed through to the shareholders or owners of the business. So will need to ensure that this does not occur.
- The penalty interest is severe if you default so be aware of what constitutes a default.
- we CAN”T apply for this on your behalf .. you have to apply via the business myIR account.
- you are entering into a legal binding loan agreement (just like with a bank). If you are a partnership or trust, then you are personally liable for the debt.
- this loan will be taken into account if applying for finance later on.
- in your accounting system, you will need a new loan code setup so please contact us if you require this added.
What to pay employees
So to recap, the wage subsidy received is for you as the employer to go towards the wage payments that you were required to pay. Under employment law, you have a contract with your employee to undertake a role for a certain amount of hours at a certain pay rate. That does not change.
Therefore any employee that works is required to get their full pay entitlement for the hours worked .. not 80% or whatever else was agreed when they weren’t working. Also now the new minimum wage rate of $18.90 applies to any hours worked.
If you have employees in a situation where they are working only some of their hours then we suggest you touch base to correctly work out their pay entitlement.
The budget was always going to be a “rescue” package and it has proven that the government are betting on jobs to get the economy through. There is no further direct help for businesses except a more targeted extension to the wage subsidy scheme for those that meet a more restricted criteria being (1) experienced or forecast to experience a 50% drop in revenue during the 30 days prior to the application date. There is also some additional loans for research and development projects.
So that is all to cover off for now .. remember to check out our blog .. Click here to check out previous blog posts
Take care and keep safe.