• Hawke's Bay small businesses claim millions in interest-free loans

Hawke's Bay small businesses claim millions in interest-free loans

More than 2000 small businesses in Hawke's Bay have already claimed $42 million in interest-free loans under a government cashflow scheme, with more now eligible. 

Hawke's Bay currently accounts for two per cent of loan recipients nationwide, with 2,494 small and medium enterprises (SMEs) claiming funding under the Small Business Cashflow Loan scheme. 

However, under changes announced by Small Business Minister Stuart Nash and Revenue Minister David Parker, the scheme will be extended for three years and the interest-free period for two years. 

Parker said the extension was one of the Government's top economic priorities after taking office as it will allow more businesses to prosper. 

“There are encouraging signs for our economy, but the global economic outlook remains uncertain. The scheme provides a backstop for small and medium businesses. The changes deliver on our election commitments." 

Nash said cashflow support for SMEs has been central to government efforts to accelerate the economic recovery and sustain businesses and jobs.

"The interest-free loans have proven a popular and fast way to access finance." 

So far 100,000 SMEs have drawn on this government support to the tune of $1.6 billion. Around 6,500 SMEs have also made more than $45.4m in repayments.

He said the decision to extend the interest-free loan scheme is designed to give confidence to the smallest businesses and keep up the momentum of recovery.

Micro businesses, with between one and five staff, have already made "good use" of the scheme, making up 82 per cent of loan recipients. While 92 per cent were to firms with 10 or fewer staff.

Nash said the firms are diverse. The majority of loans have been granted to SMEs in construction and building (17 per cent), accommodation, restaurants and cafes (12 per cent), those offering professional, scientific or technical services (10 per cent), retail trade (9 per cent%), and manufacturing (7 per cent).

“As the economy moves into recovery and rebuild we are also broadening the eligibility criteria so more businesses can access support," Nash said.

Businesses established after April 1, 2020, which have existed for six months, will now be eligible for a loan if they meet other eligibility criteria. 

“We are also changing the requirement that a business must have experienced a decline in actual or predicted revenue of at least 30 per cent in any 30-day period from January to June 2020, compared with the same period in the previous year.

“The new criteria are that businesses can demonstrate an actual drop in revenue of at least 30 per cent because of Covid-19, over any 14-day period in the previous six months, compared with the same 14-day period a year ago, Nash said. 

If the applicant was not in business a year ago, the 14-day period can be compared with the same or similar period in the previous month. Businesses must also declare that the drop in revenue is due to Covid-19, and have records to support this.

In addition, firms can draw down a second loan, if they still meet eligibility criteria and have repaid the original loan in full.

Parker says they "want to keep viable businesses afloat where we can". 

The expanded eligibility criteria come into effect in February 2021.