A West Coast tourism operator says they are thousands of dollars worse off after getting the government's Covid small business loan.
Gemma van Beek and Barry Hughes successfully applied for the Small Business Cashflow Loan Scheme. Photo: Barry Hughes
They say they were not told getting it meant they were barred from other Ministry of Social Development (MSD) Covid support and that the ministry is misinterpreting the law.
The Covid-19 pandemic has pushed Barry Hughes and his partner Gemma van Beek's West Coast kayaking business to the brink.
Earlier this year - with revenue plummeting due to the lack of international visitors - they successfully applied for the Small Business Cashflow Loan Scheme administered by the Inland Revenue Department.
But the crunch got worse, the wage subsidy ran out and there was no longer enough money to support them both - so van Beek was effectively let go.
But her application for MSD's Covid Income Relief Payment was declined because they had received the loan.
Hughes said there was no indication it would preclude either of them from getting personal support from MSD, and if they knew they never would have applied for it because it has left them thousands of dollars worse off.
"There seems to be a lack of information or coordination between government agencies in terms of making people aware of the repercussions of the help that they access.
"But we do need help, we've never had to ask for help before but unfortunately the help just isn't there at the moment I think in the way that it was intended to be."
Hughes said they expected to make $20,000 income in total next year so every dollar counted.
The loan was for paying bills like rates and rent, not wages, he said.
He said MSD was interpreting the legislation incorrectly by conflating Gemma the individual with the business - and this was illogical and unfair.
"We still contest that the small business cashflow loan is a loan to a business and the income relief payment is applicable to an individual, and the two are completely separate legal entities.
"And MSD don't seem to be interpreting the legislation this way. The wording in the legislation is quite clear, it refers to individuals rather than to businesses."
Hughes said he believed a significant number of business owner/operators would be missing out on support they need.
National Party spokesperson for Small Business Andrew Bayly said the situation pair were in was unfair.
He said a cause of the problem could be the legislation which was concocted hastily by the government.
"[They] clearly didn't really understand how small businesses work in terms of the role that directors and owners of businesses are, in many cases, absolutely an essential part of the workforce in those same businesses, and they're there employed also as an employee."
Bayly said if the problem was widespread the government needed to urgently amend the legislation.
In a statement the Ministry for Social Development said it was aware of the challenges facing small businesses.
"On the Work and Income website, CIRP applicants are advised: 'If you have received, or you're waiting for approval for a loan from the Small Business Cashflow Loan, you are not eligible for the Income Relief Payment.' This is also stated on the application form.
"Gemma was also named in Ōkārito Kayaks Limited's application for the Wage Subsidy and Wage Subsidy Extension, both of which Ōkārito Kayaks Limited received."
Hughes said he has lodged an application for a formal review.