As winter sets in, many New Zealand business owners face a critical financial burden: the final repayment deadline for Small Business Cashflow (SBC) loans issued during the COVID-19 pandemic.
What You Need to Know
The SBC loan scheme was introduced in May 2020 to provide financial support to small and medium-sized businesses affected by the pandemic. Over 129,000 businesses across New Zealand received loans totalling $2.4 billion, with an average loan amount of $17,000.
Most borrowers took out these loans in May and June 2020, meaning the five-year repayment period will end for many businesses in the coming weeks. It’s important to note that the June 2025 deadline applies only to borrowers who drew down between 12 May and late June 2020; loans approved later (or top-ups) have later due dates.
As at 31 Dec 2024, 51,021 businesses had fully repaid their loans, but a significant $953 million remained outstanding across the country. The IRD’s 12 May 2025 update shows the unpaid balance had fallen to $853 million.
Serious consequences for non-payment
The Inland Revenue Department has announced that from June 2025, they will begin defaulting loans that have not been repaid according to the agreed terms. This is not a simple administrative matter as defaulted loans will incur substantial additional costs:
- Default interest will be charged at a combined rate of 12.89% from 8 May 2025 (comprising the use of money interest rate of 9.89% plus the standard interest rate of 3%). The IRD reviews the Interest on overpayments and underpayments (UOMI) rate regularly.
- The IRD is actively pursuing recovery of already defaulted loans (approximately 10,000 loans totalling $161 million)
- Business credit ratings may be affected, impacting future borrowing capacity.
How we can assist
As insolvency specialists, we understand the complex challenges facing businesses with outstanding SBC loans. Our team can:
- Provide an assessment of financial positions and repayment capacities.
- Offer information on formal insolvency options if needed, such as voluntary administration, compromise proposals, or liquidation.
- Share strategic guidance regarding director responsibilities.
We’re here to help
With the SBC loan repayment deadline approaching for many businesses, we understand this may be causing concern for those still managing these obligations. Our team is available for a confidential, no-obligation discussion about your business’s situation.
