For those that applied for the Small Business Cashflow Loan (SBCS) in 2020, the 2-year interest-free period will be coming to an end during 2022. All businesses that received the first loan will start receiving letters advising that the interest will soon be charged to the loan and repayments should commence. If repayment is received before the 2-year anniversary then no interest will be charged.
All letters and information from the IRD will be in myIR.
We have been informed that on the 2-year anniversary of the loan drawdown, a further letter from the IRD will be produced with the repayment schedule with repayment starting 1 month after the anniversary.
In addition, we are collating information to let individual clients know when the two-year anniversary is for the first loan drawdown.
Loans drawn since the 2022 top up was available, will be interest-free for the first 2 years. This change will apply to new borrowers as well as to existing borrowers, provided there has not been any event of default on the SBCS loan.
Interest will apply at a rate of 3% per year on the remaining loan balance from the first day of the third year of the loan period.
The loan repayment period remains 5 years (60 months).
Businesses will therefore need to consider whether to repay the loan or start making repayments, in order to take advantage of the interest-free period.
More repayment information from the IRD website here.
If you’d like to discuss this with us please give us a call to discuss the repayment and what other options may be available to you.