New Zealand Bankers’ Association chief executive Roger Beaumont said banks had taken on staff earlier in the year to cope with rising compliance costs.
The New Zealand Bankers’ Association said banks had been informed that a Reserve Bank application to allow them to open had been declined and had shut their doors.
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
NZ Bankers’ Association CEO Roger Beaumont said “uptake will ultimately be driven by demand from businesses”.
NZBA data showed that since March 26 when the country first went into lockdown its members have lent $14.7 billion to businesses outside of the BFGS to more than 25,600 businesses.
“Widening the scheme criteria further supports the supply of credit to businesses in need. Uptake will ultimately be driven by demand from businesses.”
The New Zealand Bankers’ Association’s chief executive Roger Beaumont said expanding the criteria of the scheme should make it more relevant for businesses.
Financial Markets Authority
The Bankers’ Association says that since March 26, when New Zealand first went into lockdown, banks have deferred all repayments on consumer loans totalling around $21 billion for over 61,000 customers. That represents 7% of total consumer lending. It adds, however, that nearly a quarter of those customers have subsequently restarted their loan repayments.
The National Council of Rural Support Trusts and New Zealand Bankers’ Association have recently signed the agreement for the Fund. Under the agreement, the RSTs will provide up to $3000, depending on an assessment of need, and the relevant bank will match that dollar for dollar.