Government's $6.25 Billion Business Guarantee Scheme and more
Marcus Wolfgram • March 27, 2020
As I write this post in isolation (having got back from Singapore) it’s good to see the Government and society pulling together to get through the Covid-19 crisis. As announced, Key government initiates are below:
Wage subsidy cap lifted
Cabinet will remove the $150k wage cap and extend eligibility to all businesses that can demonstrate revenue loss, compared to a similar period. Businesses less than a year old are now also eligible, as are self-employed people, registered charities, NGOs, and incorporated societies. The scheme is available for 12 weeks - but it will be reviewed and could be extended. The total cost of the scheme was originally 5.1 billion and has been increased, with this announcement to 9.3 billion.
Rent freeze
We probably all know about this however, the second decision taken is to freeze rent increases and to stop no-cause terminations.
Business financing guarantee scheme
The Government has announced a $6.25 billion Business Finance Guarantee Scheme. The scheme will include a loan of up to $500,000 per business. This will apply to firms with a revenue between $250K and $80M PA. The Government will underwrite 80% of the loans and the banks will underwrite 20%. So the Government will act as a back stop for most of the loan, should there be a default. In addition to the 80/20 underwrite, bank core lending ratios will be reduced from 75% to 50%. Funding will be provided through the banks and they will continue to use their own lending criteria. It’s important to note, Government won’t prescribe lending criteria. The loans will be for a maximum of three years at competitive rates.
These are all great initiatives to keep our country working and I have been working with clients on making use of help provided by government at this time.
I'll keep you posted
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