COVID-19: Current positives and opportunities for businesses
In the current economic climate, it’s hard to find good news. However, positive economic signals in New Zealand are emerging from recent surveys and stats including improved business confidence, export and job figures. Alongside comes a commitment by the newly-re-elected Prime Minister to prioritise small business recovery and a range of new and existing Covid-19 support schemes.
Jacinda Ardern to prioritise small businesses recovery
After winning the election for her second term, Prime Minister Jacinda Ardern has emphasised that support for small businesses is one of her immediate priorities to drive economic recovery. The PM wants to extend support via small business loans and $300 million in cash incentives to hire the unemployed by the end of 2020. Other plans include a flexi-wage scheme and changes to the small business cashflow loan scheme.
The flexi-wage scheme will subsidise businesses an average of $7500 and up to $22,000 by employing unemployed Kiwis. The $311 million scheme is expected to support up to 40,000 jobs.
Meanwhile, the small business cashflow loan scheme will be extended until the end of 2023 and the interest-free period of one year will be doubled to two years. To extend greater support for small businesses, the criteria for the loan will also be expanded beyond core expenses to include investment in digital infrastructure and new equipment, as well as measures to adapt to the impacts of COVID-19.
Survey: business confidence is improving
The latest Quarterly Survey of Business Opinion by the New Zealand Institute of Economic Research (NZIER) shows that business confidence has improved, showing an increase in demand over the September quarter.
A net 1% of businesses reported an increase in their trading activity, showing improvement from the net 37% reporting a decline in the past quarter. Companies are also more positive about hiring and investment. As demand increases, businesses are more optimistic about expansion and 16% are also looking to increase headcount in the next quarter.
NZ exports holding up
Latest figures by Stats NZ show a decline of $5.9 billion in imports and a $1.2 billion increase in exports for September 2020 compared to the same period last year. This resulted in an annual goods trade surplus of $1.7 billion, a reversal of its usual position.
Small businesses continue to rebuild
The Xero Small Business Insights data for September showed that year-on-year revenue grew and the number of jobs rose in the small business sector.
Overall, small business revenue in New Zealand was up 3.4% in September compared to the same period in 2019. Meanwhile, the average number of small business jobs rose by 0.9% after declining by 1.4% in August. At present, small business employment is now at 1.8% below pre-crisis levels.
Investment in NZ startups remains stable
Investment in New Zealand startups has remained resilient despite the business disruption brought by COVID-19 restrictions, according to the latest Startup Investment report from PwC and the Angel Association. Deep tech and SaaS (software as a service) sectors attracted more than two-thirds of the total investment, with over $33.6 million invested into these sectors through to 30 June 2020.
Job numbers up in September
The latest data from Stats NZ show job numbers rose in September 2020, largely due to an increase in filled jobs in public administration and safety.
Filled jobs increased by 7,266 to 2.2 million, after a similar rise in August. The public administration and safety industry had 4,558 more jobs compared with August. Meanwhile, the largest decline in filled jobs was seen from the agriculture, forestry, and fishing industry, which was down 2,633 jobs.
Business events get green signal across NZ
Auckland’s move back to Alert Level 1 in early October was great news for the business events industry. As Kiwis have been given the green light to meet, business events such as conferences, seminars, workshops, or team recognition events are now allowed. In line with this, the Conventions and Incentives New Zealand has opened registrations for BE Reconnected, which is a free industry exhibition and networking day in Auckland on 1 December.
Financial help for small Māori-owned businesses extended
The $10 million Māori Trustee Top-Up Small Business Cashflow Loan Scheme, which has paid almost $1 million to Māori-owned small and medium-sized enterprises, has been extended until 31 December 2020.
Māori SMEs can apply if they have already received Inland Revenue’s Government Small Business Cashflow Loan. If they can prove Māori ownership and meet other criteria, they can apply for a further 50% of that loan amount from the Māori Trustee.
No repayments are required for the first two years, but the loan has to be repaid in full within five years.
Consumer travel reimbursement scheme open to travel agencies and wholesalers
Travel agents and wholesalers can apply for the Consumer Travel Reimbursement Scheme which was put in place to help Kiwis get back the money they are owed from cancelled international travel plans due to COVID-19.
The travel sector and the Ministry of Business, Innovation and Employment (MBIE) estimate around $690 million of New Zealanders’ money is locked up from cancelled travels, with around 85% related to overseas travel. Through this scheme, travel agents will be incentivised to recoup these funds for consumers.
Approximately $47.2 million will be allocated for this scheme, which involves paying NZ-based travel agents 7.5% of the value of all cash refunds they manage to recover for their customers and 5% of the value of all credits secured or rebooked for international travel.
Get in touch
If you need assistance in applying for government support schemes or you’re looking for general business financial advice, contact us today so we can guide you in considering your options.