Small Business Cashflow Loan Scheme – Terms Amended

The Small Business Cashflow (Loan) Scheme is open to all small to medium sized businesses, including sole traders, self-employed persons, not-for profit organisations, partnerships, joint ventures, and trusts.

Please see our FAQ’s below to determine whether your organisation may be eligible for the loan.


Who is eligible for the SBCS?


  • The SBCS is available to businesses with 50 or less FTE employees (Full Time Equivalent Employees). Inland Revenue has elaborated that commonly owned groups will be treated as a single entity when considering the eligibility cap of 50 FTE employees.
  • The entity applying for the loan needs to have been in business for at least six months prior to making the application, and all individuals who are employed by the business must be legally working in New Zealand.
  • The business must have experienced a 30% decline in revenue due to COVID-19. This can be over any 14-day period in the previous 6 months, when compared to the same 14-day period a year ago.
  • The business needs to be viable and must have a plan in place to ensure it remains viable.


Are new businesses eligible for the SBCS?


The organisation applying for the loan needs to have been in business for at least six months to apply for the SBCS.


What funds will be business be eligible for under the SBCS?


A business can borrow $10,000 plus $1,800 for each full-time equivalent employee, up to a maximum amount of $100,000.

A sole trader can therefore borrow $10,000 plus $1,800 for themselves – being a maximum loan of $11,800.

The organisation applying for the loan has the option to accept the full loan amount, or a smaller loan if they so choose. Once the loan application is submitted you cannot make any amendments eg you can’t change the loan amount.

Inland Revenue has an SBCS calculator you can use to determine what you might be entitled to based on the number of part-time and full-time employees you have.

See the link here.


How do you know if an employee is part time or full time?


  • An employee working 20 hours or more per week is considered full-time
  • An employee working up to 20 hours per week is considered part-time
  • If you or your employee works variable hours, such as casual employees, you can calculate average hours worked each week over the last 12 months, or since they started work for you (if less than 12 months), to work out if they are full-time or part-time.

To work out the number of full-time-equivalent employees (FTEs):

  • Full-time employees count as 1 FTE
  • Part-time employees count as 0.6 FTE

The sum of your FTEs will be rounded to a whole number.


What are the interest and repayment terms of the SBCS?


  • There will be no interest if the loan is repaid within 2 years of the initial drawdown.
  • If the loan is not repaid within 2 years, interest will be applicable for the entire term of the loan. Interest will apply at 3% per annum.
  • The loan has a maximum repayment term of 5 years (60 months).
  • No repayments are required in the first 24 months.
  • Voluntary repayments can be made at any time.

How long are applications open for the SBCS?


Applications opened on 12 May 2020 have now been extended to 31 December 2023.

The loan is administered by Inland Revenue. Applications can be made via MyIR, by selecting the ‘I want to’ section and then selecting ‘Apply for a small business loan’.


How long will it take to receive the SBCS loan?


Most businesses can expect to receive their loan payment from Inland Revenue within 5 working days. You should check and confirm you have the correct bank account recorded with MyIR as this is where the funds will be deposited to.


Do you need an NZBN (New Zealand Business Number) to apply for the SBCS?


Yes – all SBCS applications will require an NZBN. All New Zealand Registered Companies will already have an NZBN.

If you don’t have one (e.g., partnerships, self-employed persons), you will need to apply for one before you can apply for the SBCS loan. You can apply for an NZBN here.

What is the definition of a 30% decline in revenue?


To be eligible for the SBCS, your business must have experienced a 30% decline in revenue due to COVID-19. This can be over any 14-day period in the previous 6 months, when compared to the same 14-day period a year ago.


  • If revenue from the same period a year ago was affected by COVID-19 as well, you can compare it with the same 14-day period from 2 years ago


  • If your business did not exist a year ago (or if (1) above applies and your business did not exist 2 years ago), then you can compare your revenue decline with the same or similar period in the previous month

You will need to retain information to verify that your revenue decline was due to Covid-19 (for audit purposes).


What is the definition of a viable business?


The IRD have indicated that as a Director or Owner, you are expecting to be able to pay your debts as they fall due within the next 18 months.

Evidence of viability will be required at the time of applying for the loan and this may include cashflow forecasts, business plans and financial statements, all of which we can help you prepare.

Contact your local BDO Adviser for more support and information.

The SBCS has changed since I first applied, how do I know what terms are applicable to me?


As with any loan, the SBCS is subject to terms and conditions. It is important for borrowers to understand these terms and conditions, along with the declarations they are making in the application form.

All loans previously advanced under the SBCS will be subject to the amended rules so existing borrowers are not disadvantaged. If you have any concerns regarding your obligations, you can contact your local BDO advisor, or Inland Revenue.


Where can I view the current balance of my SBCS loan?


Borrowers will be able to view the loan within their MyIR account. Inland Revenue will also send notifications via MyR ahead of key milestones, such as when repayments must start and the amount of interest accruing (for loans not repaid within 2 years).


What happens if I default on my SBCS loan?


In the event of a default on the SBCS, Inland Revenue may charge default interest and declare the outstanding amount payable immediately.

If you have defaulted on an SBCS loan, you will not be eligible to re-borrow under the scheme.


Can I apply for the SBCS more than once?


Yes – If the business has fully repaid their loan before the end of 2023, they can re-borrow one further time.

They must meet the eligibility criteria again at the time they wish to re-borrow.


Is the SBCS subject to tax?


No – the SBCS loan will not be subject to income tax or good and services tax (GST).

The business may also be able to claim a deduction for expenditure funded by the loan.

How do I make a payment on my SBCS loan?


Inland Revenue has provided several ways for organisations to repay the SBCS. These can be found here.


What does it mean to be a commonly owned group?


Per the Inland Revenue website, they define a commonly owned group of businesses as where each business has the same combination of owners. The proportion of ownership is not relevant.

A commonly owned group can also occur for the purposes of the SBCS where the entity in question is ‘in substance’ part of a larger group of businesses.

This could be because the group has a dominating shareholder and the businesses operate together as if they were one, or where the ownership structure is complex, but the control is centralised, and the businesses are in substance one enterprise.


How should a commonly owned group apply for the SBCS?


If the commonly owned group has <50 FTE’s in total and meets the other criteria of the SBCS, then they can apply as follows:

  • Each separate business can apply for the loan based on the number of employees employed by each business.

What information will I need to apply for the SBCS?


  • Your NZBN number
  • Employee names, IRD numbers, and whether they are full time or part time
  • The bank account number you want the loan paid into
  • You will need to agree to the Terms and Conditions of the loan
  • You will need to make declarations regarding your eligibility


Will the IRD deduct my outstanding taxes before they give me the loan?


No – the IRD will not make any adjustments for tax debt owed.