Fighting the financial virus
Over the last four months, we’ve all learned far more than we wanted to know about coronavirus. We know now that it impacts on people in very different ways, depending on their age, health, and underlying conditions. Some get the virus without a single symptom, some get a flu-like illness, and others get so sick they face hospitalisation and even death.
Like the virus, the financial impact of COVID-19 won’t affect every person equally. It depends on your job, whether you’re a business owner or contractor, and how your industry is affected by lockdown measures. Some will be able to get through without losing anything, while others face job losses, reduced income, and business closures.
Fortunately, there are treatments for many of the financial maladies caused by COVID-19. Whether you need government support to keep your business afloat, a mortgage holiday to hang onto your home, refinancing to make your mortgage more affordable, or a loan to get you through, help is out there.
Here’s our guide to financial support during the COVID-19 crisis:
Government support for business owners
For business owners, the impact of COVID-19 varies. If you’re in an essential industry, you may have increased profits over the course of the lockdown. But other types of business are less fortunate – if you were forced to shut retail stores or cease manufacturing during the lockdown, you may be struggling to stay afloat. Even if your staff can work from home, you could be facing a loss of clients or reduced income as business confidence plummets and people cut costs.
Here’s where to get help.
- Wage subsidy scheme – if you’ve seen a decrease in revenue, the wage subsidy scheme can help you pay staff for a 12-week period. Although the subsidy pays a flat rate, you are expected to try your best to pay employees at least 80% of their usual wage.
- Essential Workers leave support – if you’re an essential business, but some of your employees are in high-risk categories, you can apply for support to pay those workers while they’re on leave.
- Tax relief – the IRD is offering tax relief for struggling businesses, from writing off interest and penalties on late tax, to changing the criteria to allow businesses to claim depreciation deductions for commercial buildings.
- Business Finance Guarantee Scheme – if you need more help keeping your business afloat, the government will guarantee loans of up to $500,000 for businesses with annual revenue of at least $250,000.
Government support for individuals
Whether you’re a homeowner or a renter you’re likely to be affected by the COVID-19 crisis in some way. If you lose your job or have your income cut, you may struggle to pay your rent or mortgage. If you’re a contractor, a sole trader, or self-employed, you may also need help with your income.
Here’s where to find help if you need it:
- Mortgage holiday scheme – if mortgage payments are an issue, your bank should be able to offer a six-month mortgage holiday. Although this won’t affect how much you need to pay back, it could give you some breathing room and help you keep your home.
- Protection for renters – measures to protect tenants include a freeze on rent increases and tenancy terminations. This means your landlord can’t raise your rent or cancel your rental agreement during the next six months.
- Redundancy support – if you lose your job thanks to COVID-19, you may be able to get support from the government while you look for work.
- Tax credits – if you receive Working for Families tax credits and your income changes, you may be entitled to increased payments as a result.
- Wage subsidy – if you are self-employed, a contractor, or a sole trader, and your income is affected by COVID-19, you may also be eligible for the wage subsidy. The subsidy won’t match your usual income but can help offset the loss of income.
Finding your own financial support
Government support is great, but it won’t cover every circumstance. If you’ve applied for subsidies, loans, and other forms of support but still need financial help, you can look elsewhere.
- Refinancing your home – if a mortgage holiday doesn’t appeal, refinancing is another option. Switching to a different lender, a lower interest rate, or a longer term could make your repayments significantly lower, helping you get through without losing your home.
- Mortgage relief – by negotiating with your bank, it’s possible to get some relief from mortgage repayments without refinancing. Options include a mortgage holiday, paying interest-only for a period, or getting a home loan extension.
- Insurance – taking out income protection, mortgage repayment, or life insurance can help protect you and your family at a difficult and uncertain time.
- Business loans – for some businesses, wage subsidies and tax relief may not be enough. If you’re confident that your business can recover, taking on a business loan could help boost cash flow and get through the crisis intact.
Don’t panic – access support
COVID-19 has cost lives and livelihoods all over the world, and New Zealand is no exception. Although we may be lucky to escape the worst impacts of the virus, we’ll be dealing with the financial fallout for years to come. If your business or income is affected, don’t panic – there’s support available from the government and lenders. And if you’re not sure where to start or what you’re entitled to, the experts at Global Finance can help.
Get in touch for expert financial advice and support – personal or business.