Eligibility for the Small Business Cashflow Scheme

The scheme provided loans to small to medium businesses or organisations that were affected by COVID-19.

Applications are now closed and the information below is a summary for you to refer to.

The following eligibility criteria had to be met before you could apply

You were 18 years or over and had the legal right and proper authority to commit your business or organisation to the loan.

You also had to agree to the terms and conditions of the loan and meet the following conditions.

You must have had a business or organisation

If you applied for a loan between 12 May 2020 to 27 January 2021 your business or organisation must have existed before 1 April 2020. All employees must have been working legally in New Zealand.

If you applied for a loan after 27 January 2021, you must have owned and operated the business or organisation for at least 6 months before you applied for the loan. All employees must have been working legally in New Zealand.

You and your business must have been physically in New Zealand

If you carried on your business by yourself as a sole trader, you must have been physically in and legally working in New Zealand. If you were not a sole trader, your business or organisation (for example, a company) must have been physically located in New Zealand and existing under the laws of New Zealand.

Revenue decline of 30% due to the impact of COVID-19

If you applied for a loan in the period 12 May 2020 to 27 January 2021 actual or predicted revenue must have dropped by at least 30% from January 2020 to June 2020 as defined in the wage subsidy scheme.

Declaration - COVID-19 Wage Subsidy - Work and Income

Declaration - 2020 COVID-19 Wage Subsidy Scheme - Work and Income

If you applied for a loan after 27 January 2021 actual revenue must have declined by at least 30% and the drop must have been due to the impact of COVID-19.

You had to keep this information in case we needed to confirm it.

Measuring the decline in revenue for loans applied for after 27 January 2021

This drop in revenue was measured over a 14-day period in the 6 months before applying, compared with the same 14-day period 1 year earlier.

If the revenue from the same period 1 year earlier was affected by COVID-19 as well, you had to compare it with the same 14-day period 2 years earlier.

If your business or organisation did not exist 1 year earlier, or 2 years earlier if the above applies, you compared it with the same or similar period in the previous month.

The drop in revenue between these 2 periods had to be at least 30% and because of the impact of COVID-19.

Pre-revenue businesses and organisations

A pre-revenue business or organisation is one that has taken active steps to get market-ready but has not begun trading yet. It is a business that has not yet received any revenue.

If you applied for a loan between 12 May 2020 to 27 January 2021 businesses could include a drop in projected capital income as revenue where they:

• had no revenue other than seed or venture capital, or Government funding, and
• were recognised by Callaghan Innovation as a legitimate research and development start up business.

If you applied for a loan after 27 January 2021 and your business or organisation did not receive any revenue (it was pre-revenue), you needed to have had a 30% drop in capital receipts due to the impact of COVID-19.

Capital receipts included external funding raised by businesses or organisations to get market ready.

Your business must have had 50 or fewer full-time-equivalent employees (FTEs)

For the purposes of an SBCS loan a full-time employee worked 20 hours or more a week and counted as 1 FTE. A part-time employee worked less than 20 hours a week and counted as 0.6 FTE. The total number of FTEs was rounded up to the nearest whole number. If your business or organisation was part of a commonly owned group at the time of the application, the commonly owned group must have had 50 or fewer FTEs.

Your business must be viable

Your business or organisation must be viable and ongoing and have a plan to ensure it stays viable and ongoing. A viable business means the directors or owners have good reason to believe the business or organisation will be able to pay its debts when invoiced in the next 18 months.

You should have kept records of the business or organisation’s ongoing viability at the time of applying for the loan. We may ask to see these. Your records may include:

• a relevant cash-flow forecast for the business
• a business plan that includes where future revenue will come from
• financial statements showing the business has enough resources to keep going when it includes the SBCS loan
• your accountant’s assessment that the business or organisation is viable and ongoing.

Use of the loan

The loan must have been used to pay your business or organisation’s core operating costs or used to pay capital costs that helped your business adapt to the circumstances caused by COVID-19. Costs may have included but were not limited to:

• rent for the business
• insurance
• utilities
• supplier payments
• rates.

The loan must not have been given to the business or organisation’s shareholders or owners for their personal use, such as by a dividend or loan to the shareholders or owners.

No earlier event of default

Your business or organisation was not eligible for a second loan or top up loan if it had defaulted on an earlier loan under the SBCS. This condition applied whether the default had or had not resulted in you having to repay the loan to us. This applied even if the default had been sorted out with us.