After monitoring the impact of the COVID Protection Framework on businesses and the economy, the New Zealand government has decided to offer additional support. Each COVID Support Payment will be $4,000 per business plus $400 per full-time employee, capped at 50 FTEs or $24,000, this is the same rate as the most recent Transition Payment.
The government has observed that the majority of the economy is operating close to normal, but in some sectors, like hospitality and events, there has been a significant drop-off in business. "There is a range of reasons for this, but it is clear that the impact is putting a number of viable businesses at risk of not being able to operate," noted the government in a news release.
How will the support scheme work?
New Zealand opens the applications for the first payment on 28th February and payments start from 1st March.
The support payments will be available on a fortnightly basis for six weeks, with a limit of three payments in total. The government will continue to closely monitor the situation and may extend the payment, if necessary.
A higher threshold is being set in terms of revenue loss than previous support in order to target those most affected. As per the new guidelines, firms must show a 40 percent drop in seven consecutive days within the six weeks prior to the shift to Phase 2 of the Omicron response on February 15, compared to seven days after that date.
Additional measures to curb the challenges faced by businesses
Furthermore, under the Small Business Cashflow Loans Scheme, the amount of funding available to eligible businesses, is also expected to increase with the introduction of a ‘top up’ loan.
The top up loan may help the firms that have already accessed a loan to draw down an additional $10,000 with a new repayment period of 5 years and the first 2 years being interest-free.
The cabinet has also agreed to remove the first two years of accrued base interest from all borrowers who have, or will, take out a loan under the scheme. Lastly, for businesses struggling to pay tax because of the impacts of COVID may have an opportunity to delay starting payments to a later date, or could write off any part of the tax, subject to eligibility and approvals.