Covid-19: New financial support available for companies in difficulty due to Omicron
A new Covid-19 support payment of $4,000 per business plus $400 per full-time worker will be made available to certain businesses affected by the Omicron outbreak, the government says.
Finance Minister Grant Robertson said to be eligible for the payment, businesses must show a 40% drop in seven consecutive days in the six weeks before the Omicron government’s response moves into phase two on 15 February.
“It will be available fortnightly for six weeks – so three payments in total,” Robertson said.
Each payment would be $4,000 per company plus $400 per full-time employee, capped at 50 full-time employees or $24,000, he said.
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The amount was the same as the most recent transition payment, he said.
“We believe this will get people through the worst of the Omicron outbreak.”
It had been estimated that the program would cost the government between $160 million and $260 million, he said.
The government had been monitoring the impact of the Covid-19 protective framework and although most businesses were able to open and operate relatively normally, even in red, some sectors were struggling, he said.
“We can see that the majority of the economy is operating almost normally, but in some sectors, like hospitality and events, there has been a significant drop in business,” Robertson said.
“There are a range of reasons for this, but clearly the impact is putting a number of viable businesses at risk of not being able to operate.”
Applications for the first payment open February 28, with payments starting March 1.
International experience has shown that the peak of the Omicron outbreak should pass after about six weeks, he said.
The government will closely monitor the situation and have the option to extend the payment if necessary, he said.
“We looked closely at whether we could offer sector-specific packages, but the definition of who is in which sector and the need to provide liquidity quickly meant that this was not a feasible option to reach those most affected. “
Revenue Minister David Parker said changes were also being made to the Small Business Cash Loan Scheme to increase the amount of finance available to eligible businesses through the introduction of a top-up loan.
The top-up loan would allow businesses that had already obtained a loan to withdraw an additional $10,000 with a new five-year repayment period and the first two years interest-free.
The Cabinet had also agreed to waive the first two years of accrued base interest from all borrowers who had taken or would take a loan under the scheme, he said.
The change would mean that interest would only start accruing at the start of the third year, he said.
It also extended the tax department commissioner’s ability to apply flexibility for tax payment dates and terms to help businesses facing cash pressures, he said.
Any business that is struggling to pay taxes due to the impacts of Covid-19 should log into myIR to see if they can delay the start of payments to a later date, or if part of the tax can be waived, did he declare.
Restaurant Association chief executive Marisa Bidois said she welcomed the financial support scheme.
“Hotel businesses are bleeding money right now, which will bring some very welcome relief to business owners,” Bidois said.
She wished the threshold had been set at 30% to reflect the average losses reported by members and more fairly reflect the cumulative effect of revenue declines members were experiencing from year to year, she said.
“However, we are still confident that it will be of great help to so many small businesses struggling to cover basic costs at the moment.”
empty and people were reluctant to spend time in public spaces, which would continue to hurt hospitality, she said.
“Omicron is currently having a tremendous effect on our industry, which unfortunately we do not see changing anytime soon.”