Small Business Cashflow Scheme (SBCS) Loan Repayments: What You Need to Know Before the 2025 Deadline
The Small Business Cashflow Scheme (SBCS) was a lifeline for many New Zealand small businesses during the economic uncertainty brought about by the COVID-19 pandemic. Introduced in May 2020, the loan scheme offered interest-free financial support to help eligible businesses stay afloat during challenging times. As we move further into 2025, it’s important for businesses to be aware that the final repayment dates for many of these loans are fast approaching.
Loan Term and Interest
The standard term for an SBCS loan is five years from the date of approval. For most recipients who applied early, this means their repayment deadline will fall between May and June 2025. A major benefit of the scheme was that no interest would be charged for the first two years, provided no default occurred. After this initial interest-free period, a concessional interest rate of 3% per annum is applied to the outstanding balance.
This structure was designed to ease the financial burden on small businesses, giving them a runway to recover without the immediate pressure of loan repayments. However, with the five-year repayment window nearing its end, businesses need to act now to avoid penalties.
Default Consequences
If the loan is not fully repaid within 20 working days after the final repayment date, Inland Revenue (IR) will classify the loan as in default. This triggers several significant consequences:
IR may demand full repayment of the remaining loan balance.
Default interest of 13.88% will be charged on the outstanding balance.
IR may initiate legal action to recover the unpaid debt.
These consequences can have serious implications for your business’s cash flow and credit history. Therefore, staying on top of your repayment plan is crucial.
How to Manage Your SBCS Loan
To avoid default, take the following steps:
Log into your myIR account to check your current loan balance, repayment history, and the final repayment date.
Make extra payments if you can. Be sure to select SBC as the tax type when making payments to ensure they are correctly applied.
Set up a repayment plan if you anticipate difficulty in paying the loan in full by the due date. This can be done by sending a message via myIR or by contacting IR directly. Setting up a repayment plan can help you avoid the steep default interest rate and keep your loan interest at 3%.
Review your business cash flow and budget to ensure you can meet the remaining loan obligations on time.
Final Thoughts
With just months left before many SBC loans reach their repayment deadlines, it’s essential to take proactive steps now. Whether that means making additional payments, reviewing your repayment schedule, or seeking advice on setting up a repayment plan, now is the time to act.
At Tax Professionals, we’re here to help. If you need guidance on managing your SBC loan or any other business tax obligations, get in touch with our expert team today. Let’s keep your business on track and penalty-free.
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