Final Repayment Date Nears for Small Business Cashflow (SBC) Loans
The Small Business Cashflow (SBC) Loan Scheme was introduced in May 2020 to support small and medium-sized businesses affected by the COVID-19 pandemic. Over 129,000 businesses accessed these loans, receiving a total of $2.4 billion, with an average loan size of $17,000. However, the final repayment deadline is fast approaching, and businesses must ensure they meet their obligations to avoid penalties.
Who Took Out These Loans?
A high proportion of borrowers were sole traders, followed by small businesses with 2-5 full-time employees (FTEs). The highest number of loans were taken out in Auckland, where lockdowns lasted longer, impacting businesses significantly. Most loans were issued during the initial months of the scheme, meaning many businesses will reach their repayment deadline from June 2025.
What Happens If You Don’t Repay On Time?
From June 2025, Inland Revenue (IR) will default loans that have not been paid off, and businesses will face:
✅ Default interest charges – A combined rate of 13.88% (10.88% Use of Money Interest + 3% standard interest rate).
✅ Active recovery efforts by IRD – As of 31 December 2024, 10,000 loans were already in default, amounting to over $161 million. IRD has begun enforcement actions to recover these funds.
✅ Notifications and reminders from IRD – Businesses behind on their repayment plans will receive warnings, urging them to take action before penalties apply.
Where Does the Debt Stand Today?
As of December 2024:
51,021 businesses have fully repaid their loans.
A total of $953 million is still outstanding.
IRD has 12 judgments lodged in Australian courts for debt recovery.
Steps to Take Now
To avoid penalties, businesses must review their repayment status and ensure they are meeting obligations. Here’s what you can do:
✔️ Check your repayment plan – Log in to myIR to review your loan balance and upcoming payments.
✔️ Ensure you’re up to date – If you’ve fallen behind, try to make extra payments before June 2025.
✔️ Contact IRD if needed – If you’re struggling to repay, you can discuss hardship options via the secure channel in myIR.
✔️ Plan your finances – Ensure your business has a strategy to meet repayments without impacting cash flow.
Act Now to Avoid Financial Stress
With the repayment deadline fast approaching, businesses must prioritize their loan obligations to prevent penalties and additional financial strain. If you need help navigating tax obligations, repayment plans, or financial structuring, seeking professional tax advice can make all the difference.