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Interest and repayments required for Covid-19 Small Business Cashflow (Loan) Scheme

Dec 13, 2021 / 2 minutes read

Applications for the Small Business Cashflow Scheme opened on 12 May 2020.

This scheme/loan is to support small to medium-sized businesses struggling with reduced revenue due to the impacts on Covid-19 and the associated lockdowns. Applications are open until 31 December 2023.

For a business to qualify for this scheme they:

-         must have been in business for at least 6 months; and

-         must have 50 or fewer full-time equivalent employees (FTE); and

-         have experienced at least a 30% decline in actual revenue due to COVID-19; and

-         the business remains viable.

If a business meets the above then it can apply to receive a loan. The loan is $10,000 per business plus an additional $1,800 per FTE up to a maximum of $100,000. Sole traders can receive up to $11,800.

These loans are required to be paid within 5 years with no repayments required in the first 2 years of the loan. Loans are subject to interest at a rate of 3% per year. However, if the loans are fully repaid within 2 years there is no interest.

The first tranche of loans was issued in May 2020. This means if you drew down a loan in May 2020 then repayments will begin from May 2022. You will also be subject to interest on the balance of the loan owing in May 2022. You need to consider:

  • the cash flow impact on your business of loan repayments from May 2022;
  • should I repay my loan before May 2022 to avoid paying any interest?
  • if you are not repaying your loan in full you will be subject to interest and be required to make repayments. Should additional repayments be made to pay the loan off before the expiry of the 5-year term to minimise interest?

If you have any questions about this loan scheme or what you should do if you have used this scheme, please give us a call.



Craig McCallum


Craig is an expert in reviewing and analysing client’s financial statements and tax returns and provides specialist taxation advice, you can always expect Craig to have his finger on the taxation pulse.

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