As we write this article there is just one remaining “active” case of Covid-19 as there has been no new cases for 12 days. There seems no obvious reason why we have not already moved to Level 1. In terms of eradicating the virus in New Zealand, it is job done. The question now is whether the Prime Minister will allow the country to get on with the equally important job of rebuilding the economy. Cabinet will meet on 8 June to decide when we move to Level 1. The Prime Minister has given strong indications that Level 1 could start 10 June.
The Prime Minister has announced that Level 1 does away with all restrictions on business. Social distancing will no longer be required and there will be no limit on crowd sizes. It is also good timing for the return of the domestic Super Rugby competition.
While Level 1 is very much life as normal, the Prime Minister gave the following guidance of measures that continue:
- Sick people should stay home
- Anyone with cod and flu symptoms should talk to their GP and get tested
- People should continue to wash their hands (and should not need to be told to do this by the Government)
- People should sneeze /cough into their elbow
- People are required to self-isolate if required by a health official
- People should track their own movements
- Businesses should display QR code for the tracking app.
- People should stay vigilant
- Strict border measures will remain indefinitely.
The events industry is working on some guidelines for tracing for large events.
Things are looking really good for New Zealand being able to resume life in the new normal settings in the very near term.
It’s been a while since the Government has announced any new meaningful support for business, so we have published an update of any sort for a while either. While we don’t have anything new to report, some of the Government support schemes are ending next week, so we thought we would take the opportunity to remind you of these.
Small business cashflow scheme (SBCS)
As a quick refresher, the SBCS is a modest loan scheme for small businesses who are impacted by Covid-19. These loans are a maximum of $10,000 per business + $1,800 per employee (up to $100,000/50 employees). A business needs to have received the wage subsidy or would have been eligible but did not apply for whatever reason to be eligible for one of these loans. The benefit of these loans is that they are unsecured and have a low interest rate of 3%. In fact, if the loan is repaid in full within 12 months, it is interest-free.Applications for these close on the 12th of June 2020. Although we would not be surprised if the Government announced an extension for these loans.
The original 12-week wage subsidy closes 9 June. That subsidy is available to a business that has experienced a 30% decline in turnover in a one month or 30-day period (between January and 9 June) compared against a comparable period in the prior 12 months.
While it was possible to apply for the subsidy on the basis of a predicted turnover drop, some businesses decided to wait to see how things played out. There is no more time for waiting now, if you haven’t file and application, and you are eligible, the clock is ticking.
Wage subsidy extension
A further 8-week wage subsidy (referred to as the Wage Subsidy Extension) starts from 10 June. Full details for that extension have not been published yet. What we do know is that the turnover-drop threshold is increased from 30% to 40%, and that turnover drop (measured against a comparable period in the past 12 months) must occur in the 30 days prior to making the application.
Business Finance Guarantee (BFG) scheme
The BFG scheme is the Government guaranteed loan scheme for SME’s administered through banks. The BFG scheme has been an utter failure to date. The Government described this as a $6.25b dollar scheme, but around a week ago it was reported that only $60m in BFG loans had been written. The problem with these loans seems to be that there is still too much red-tape (despite the changes to the scheme about a month ago).These loans are still available until the 30th of September 2020, but it is not like businesses are rushing out to get them anyway.