Getting cash flow going

The last couple of months have been absolutely extraordinary. While it is clear that locking down hard was the right thing to do to protect the health of New Zealanders, closing the doors for a minimum of four weeks and in some cases seven weeks has been very challenging for businesses.

Very sadly, some businesses have not been able to survive. Talking to people who have had to close the doors permanently and look for new jobs, the problem in almost all cases has been cashflow.

That indicates what we need to help businesses to survive. Get cash in the door.

The Government has made several moves to help businesses with cashflow.

The wage subsidy has been extended for a further 8 weeks for businesses whose revenue is down 50%. This can be applied for at any time from 10 June until 1 September. To claim the subsidy, the business must be able to show that in the 30 days before the date of application, revenue is down by 50% compared to the same 30 days last year. The subsidy will be paid in a lump sum, calculated at $585.80 per week for full time employees and $350 per week for part time employees for a period of 8 weeks. The subsidy can be applied for on the WINZ website.

A low interest loan is available from Inland Revenue. Businesses can borrow $10,000 plus an extra $1,800 per full time employee. The maximum amount that can be borrowed is $10,000. The loan is for five years but repayments don’t have to be made for the first two years. Interest is charged at 3%, except that if the loan is repaid within one year, there is no interest at all.

If a business is predicted to make a tax loss, instead of carrying that loss forward and writing it off against future profits, as a one off measure it can carry the loss back and write it off against profits from the previous two years. This means that provisional tax payments may be able to be reduced, and in some cases, businesses can get refunds. Check with your accountant to see if this would work for you.

All these measures are designed to help keep cashflow going and to help businesses to survive and in time, grow again. If we can help our businesses through this difficult time, we will all be better off.

-by Deborah Russell, Labour MP for New Lynn