The New Zealand Bankers’ Association today welcomed further changes to the government’s Business Finance Guarantee Scheme.
“We think expanding the criteria should make it more relevant for businesses in need at this time,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“Changes that will help include extending the loan maximum from $500,000 to $5 million, and the loan term from three to five years. Allowing more businesses with revenue up to $200 million to apply will also help scheme take up.
“Widening the scheme criteria further supports the supply of credit to businesses in need. Uptake will ultimately be driven by demand from businesses. We encourage businesses looking to borrow to talk to their bank about their eligibility to borrow under the scheme.”
The scheme, which was launched in April, makes available up to $6.25 billion in lending to eligible businesses. Under the scheme bank loans are supported by a guarantee in a risk-sharing agreement with the government. The government covers 80 per cent of the risk and banks cover 20 per cent.
The Business Finance Guarantee Scheme is one way in which banks are currently supporting businesses. Other ways include:
- Restructuring loans to reduce repayments, for example extending the term of the loan, temporarily moving to interest only repayments, and in some cases deferring all repayments temporarily
- Providing new business loans
- Deferring mortgage repayments
- Consolidating loans to help make repayments more manageable
- Providing access to short-term funding.
Since New Zealand first went into lockdown on 26 March banks have approved loans to businesses totalling almost $15 billion.
More information about the Business Finance Guarantee Scheme is available at:
ENDS