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Businesses whose revenue has dropped by 40% because of Covid-19 will now be eligible.
Originally, only businesses whose income had halved could apply.
The Government says the widened criteria means 40,000 more businesses will be eligible for the eight-week scheme from next week.
Small businesses have also been given an extension of more than a month to apply for the small business cashflow loan scheme.
Otago Southland Employers Association chief executive Virginia Nicholls said the Government had listened to business feedback on the wage subsidy threshold.
"This will enable a number of businesses to continue to operate, and will allow more time to see if they can retain staff in these challenging times.
"We advocated for this change, and it is great to see that Government is listening."
The extension of the cashflow loan scheme was also welcomed.
"Both of these changes will provide business some breathing space as they assess levels of demand after we get back to Alert Level 1."
She hoped some tourism, retail and hospitality businesses would be able to retain staff.
Those businesses were also hoping that the transtasman bubble could "safely start with travel between New Zealand and the states of New South Wales and Victoria".
— Additional reporting RNZ