End of IRD’s Small Business Cashflow (SBC) Loan Scheme: What You Need to Know
The New Zealand Government’s Small Business Cashflow (SBC) Loan Scheme was introduced to provide critical support to businesses during challenging economic times. It offered a lifeline for many small businesses, allowing them to manage cash flow issues, maintain operations, and retain staff. However, the scheme is now approaching its conclusion for five-year loans, and businesses need to be aware of the implications.
What Happens When the Loan Expires?
For businesses with loans that are reaching the end of their five-year term, any unpaid balance — including interest — will automatically be treated as overdue debt. The Inland Revenue Department (IRD) may also charge default interest on any overdue amounts. This means businesses need to proactively manage their loan repayments to avoid additional costs and potential compliance issues.
IRD has communicated that customers with loans expiring before 30 June 2026 will receive reminders in late November 2025 and again in February 2026. These reminders will provide guidance on repayment and options to address overdue balances. Some notices will be sent directly through myIR, and while they will not be redirected to tax agents, businesses can view them online to ensure they don’t miss important deadlines.
Who Will Be Contacted?
IRD will reach out to businesses in two key scenarios:
Businesses that have fallen behind in their payments, to discuss their outstanding loan balance and repayment options.
Businesses that have defaulted on the loan terms, to negotiate ways to settle the debt and bring the account back into compliance.
It’s crucial for business owners to engage with IRD promptly if they fall into either category. Proactively communicating and arranging repayments can help prevent additional charges and avoid potential enforcement action.
Planning Ahead
As the SBC Loan Scheme comes to an end, it’s important for small business owners to review their cash flow and ensure they are prepared for repayments. Consider the following:
Budget for repayments: Factor in the outstanding balance and interest into your cash flow planning to avoid surprises.
Explore refinancing options: If meeting the full repayment is difficult, discuss alternative financing options with your accountant or lender.
Seek professional advice: A tax or accounting professional can help you navigate repayment obligations and explore strategies like Tax Pooling to reduce interest costs.
Final Thoughts
The SBC Loan Scheme has been a valuable tool for many small businesses, but with its conclusion approaching, careful planning is essential. Being proactive, understanding your obligations, and seeking expert guidance can ensure a smooth transition and help your business maintain financial health.
If your business has an SBC loan approaching its expiry, now is the time to take action. Contact your accountant or the IRD to review your repayment options and ensure you remain compliant. Staying ahead of deadlines will save time, money, and stress in the long run.