Question :
Hi , firstly I saw an article the other day by Andy Hamilton regarding helping start-ups , and it made a lot of sense . Thanks ! My problem is that 12 months ago I started working on an idea for a job listing site . I have spent quite a bit of time and money getting most things in place . I was still working a lower-paying day job , and borrowed some money . Yes , I know , it was a punt , it was always going to be tight , but I felt it was worth a try .Then Covid hit , my income dropped to below my rent and loan repayments ( which total around $3000 a month ) and I have used up all my money , the site development ( mostly done in Australia ) has stalled , there are ongoing costs ( only a few hundred a month , a business phone line , internet , site hosting is on a dedicated server on contract , etc ) . Even things like travelling to Australia for one-on-one training , which has effectively already been part-paid for as part of the contract , won’t happen , both because of Covid , but also airfares and accom would be a problem now .The site never traded of course , I have a Business Number , but it has never paid me anything ( no wages )  , and it has never filed a GST return or had any income . Basically , I don’t seem to qualify for any Government help , I’m out of $$$ and the loan payments will start being dishonoured in a month . Total expenses ( which have been paid from my bank account ) are around $50k , but more than half of that is website costs , so around $20k has been spent in NZ , and therefore I may be able to claim a couple of thousand in GST back . Apart from that , which may stall things a month or so , any ideas ?By the way , I have talked to the 2 main lenders , no real help ( and some extra fees too if I refinance , to really rub it in ) .I appear to be one of those zombie businesses that has fallen through the rules — Covid has cost quite a bit , but as I wasn’t trading or employing anyone pre-lockdown , I don’t seem to qualify for anything . Thanks .

Question submitted 17/07/20 @ 06:48am
Industry: COVID-19 Funding & Support
  • Morena, the bad news is that you are not alone out there, a bunch of people in the same position, thinking about what you can do to get yourself back into positive cash flow and/or access grants – i came across this funding source with WINZ – are you registered with them already, might be worth a try – https://www.workandincome.govt.nz/products/a-z-benefits/self-employment-start-up-payment.html – they seem to enable up to $10,000 of startup expenses and maybe access to $1,000 of training, albeit you probably don’t need the training right now. Clearly the other option of earning income/revenue from the site is not relevant as it is not operating right now. How else can you earn some revenue or income? Lots of people are doing side hustles right now.

    Thanks Andrew . I assumed I wouldn’t qualify for WINZ assistance , as I am working ( at a day job ) and have been for over 5 years . Effectively , this job listing website idea was my ‘side hustle’ .

    The aim was to establish this new business , leave my current employment , and employ people .

    Initial interest has been strong , with an initial indicated income of around $10k a month . I had agreements already in place for over $3500 a month , and even though launch date ( pre-Covid ) was likely to be 1 June , by March I already had payment of $520 .

    It is now likely this whole idea will fail , leaving me $30k in debt . At least I will still be employed . Ironically , $10k will enable it to be launched , although income will be down .

    Current Government measures appear to only apply to existing businesses , and whilst they have track records , there appears to be some businesses which were in their dying breathes , but have still received financial help , and likewise very large multinationals have also qualified , whereas someone trying to get some momentum is shut out of existing help .

    Hey Graeme. I know, re the ‘pockets’ of help – or the gaps that exist. I think that Governments treat the response process in ‘silos’ which I understand why – people who have lost their job, employers who they want to keep people employed and people doing R&D startups, people doing exporting – then they get situations like yours and it just does not quite fit.

    I don’t have any new insights on this – the exceptions if they mount up to something material can lead to a change in the way that these policies are applied which is a good thing if it happens, but not good if it takes months and months.

    All the best, and I wish I could solve this for you!

    Cheers . Am I showing my naievity here , but from what I have seen on-line , and even myself personally , the ‘original’ bank/Government partnership loan scheme got almost no takers , I think the existing scheme is below budgets , and there are people like me who don’t qualify , but would be keen to access loans ( grants are ‘better’ , although to a certain degree they aren’t , as it means everyone pays , whereas a loan only the borrower does in my basic understanding ) .

    I know it would be difficult to convince the Govt , but thinking out loud , would it be worth considering a peer-to-peer loan scheme for start-ups , maybe with a mix of Govt , bank and private money , even if the interest is Govt guaranteed ? Or is that getting too close to past ‘lessons’ like DFC in the 80’s ( before my time , but it sounded like a disaster ? ) and South Canterbury Finance ? It may share the risk , give ‘Angel’ investors a chance to participate in pet industries , and presumably , even with some failures , it would get mainly positive results , and the failures would cost less than a blanket ‘grant’ scheme ?

    Hey Graeme – you spotted it, the original loan scheme has not hit the volume, while the small business cash flow loan via the IRD has now hit nearly 1.5b out the door – so that worked – at one point the Government considered a grant, but it was not where they decided ultimately. What we struggle with from a data perspective is ‘whether the lending’ has stopped for some parts of the market, because the banks are saying ‘lots of lending has happened’ – for now, it appears the Government are not going to do more so close to the election, so it is up to the rest of us to work our way through what can be done – no easy answers there – I figure that post covid, now we are in the ‘flat line period’ where there will be some winners, some survivors and some people who can’t get through the negative cash period – don’t like observing that. A

    Hi everyone .

    I have just seen reports of the latest Job Creation scheme , and it looks like yet another scheme that is specifically designed to exclude me haha . As above , I have been trying to get a new business up and running , but due to Covid I spent the remaining $$$ I had on living . So I have spent $50k approx ( roughly half that is borrowed ) , it needs $10k to launch , I can’t borrow that , and in fact I am struggling to pay the payments on the money I have borrowed , as well as live .

    I have customers that want to use my services ( although less than pre-Covid ) and the business plan shows 4 staff within the first 2 years . Right now I am the only ’employee’ , but seems to be the biggest problem — I have been paying the bills , paying my own living costs , and have never paid myself . The business has been registered with the IRD etc for 12 months , but never sold anything , never paid wages , never paid GST .

    I have never been on any benefit .

    So I have been totally unable to claim any help , and likewise these latest schemes don’t seem to be of any value to me — it looks like I can’t even employ myself and claim some of that back , as I am not unemployed , and have a small income from an hourly job .

    ANY advice would be helpful thanks folks ( and yes , I have rung the 0800 numbers which go to — I think — MBIE , but again , no success ! ) .

    It seems like every employer , every job , and even every weird scheme someone unemployed thinks up , will get Government assistance .

    Hey Graeme – good to hear from you, have you tried to apply for the Wage Subsidy for yourself? Even if you applied for part-time or is the requirement that you had to have paid yourself in that period? Covid-19 has impacted on your business, so you might fit their criteria on impact, I am just not sure about whether you have to have been paid for you to claim the part-time subsidy? Worth trying to call WINZ for this?

    Thanks Andy — I started filling out the forms , but you have to show you have been getting paid , that apart from Covid it was a viable business ( almost impossible to prove if you haven’t traded ) , and that you have to show a 30% ( and then 40% for the next step ) loss of turnover . There is a slight ‘out’ for new and very fast growing businesses , but there are ‘claw-back’ provisions , and in fact the ability to file fraud complaints , so before I signed anything , I rung the Business Helpline , which from memory went to MBIE voicemail , and I got a call back from Manakau area ( 09 262 or similar phone number from memory ) who said that as I still wasn’t trading it would not be approved . When I pointed out that I wasn’t trading as I had spent all my money on fixed costs and food and paying loans during lockdown , the guy basically said that is my responsibility .

    Graeme, have you considered the R&D loan scheme? It sounds like you are doing something innovative with software and had plans to do more; if so, there may be some scope to apply for the R&D loan to fund that activity. You will need to show financial solvency at 31 December 2019 (presumably assets acquired equal the debt taken on) and an R&D plan that was in place before 26 March. From your comments it is clear your ability to fund any R&D activity was adversely affected by COVID-19 which is another criteria. Details are at the following address:

    For the wage subsidy, if you have had no revenue and you weren’t previously registered with Callaghan Innovation, you are correct a wage subsidy application is unlikely to be successful. You mention you had received a payment of $520; was this received before COVID hit and if so would the circumstances of this payment support a claim under the high growth criteria? Please let me know if you would like to discuss the circumstances (Claire@vcfo.co.nz).

    The small business cashflow loan is also predicated on the wage subsidy criteria, so if you’re unable to apply for the subsidy it is also unlikely to be available.

    I’m sure you’ve considered it, but would the customers you had already connected with be interested in some sort of investment or prepayment scheme?

    I’m sorry there isn’t something more positive available.


    Thanks Claire and Andy — it gets a bit overwhelming ( I guess that’s business haha ! ) but I never consider what I was doing is innovative or even R & D — basically , as well as all the set-up costs , I have been paying fort the reasonably specialised website to be developed , but that is a 3rd party , they are based offshore , and the pricing includes training .

    When I first started looking , I looked at WordPress based template sites , but there seems to be lots of horror stories around a variety of issues , so everything seemed to point towards spending $25k plus , rather than $2k on something that would potentially crash/be hacked/be difficult to expand/alter/etc/etc .

    My suspicion , unfortunately , is that even a NZ designed ‘custom’ website wouldn’t be classed as R&D in itself ( and all the indications were that the bill would be closer to $100k than $25k ), but I will follow up on all leads thanks . Great to get good advice and think along different avenues !

    Hey Graeme – did you try this line? 0800 500 362

    Yes , 99% sure that was the number — they have different numbers North Island and South Island . Cheers

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