New Zealand’s major banks have rolled out emergency government-backed loans for businesses impacted by Covid-19.
Businesses with an annual turnover of between $250,000 and $80 million will now be able to access lending of up to $500,000 for a term of up to three years, and banks are making applications available immediately. The government is taking 80% of the risk for the lending, with banks picking up the remaining 20%.
ANZ, ASB, BNZ, Kiwibank and Westpac have all opened applications for the Business Finance Guarantee Scheme loans, and are encouraging their SME customers to consider the option if they are experiencing financial stress.
“Covid-19 restrictions are financially impacting thousands of businesses,” ANZ’s managing director commercial and agri Mark Hiddleston said.
“This lending will provide qualifying businesses a buffer to maintain operations, manage cashflow and meet payroll during this extraordinary time.”
Given the anticipated high demand, he said decisions on loans would likely take up to several days.
Kiwibank’s CEO Steve Jurkovich urged businesses to get in touch as early as possible, even if they think they have enough cashflow to weather the initial shock. He also says Kiwibank customers “must have exhausted existing facilities” before accessing the Guarantee scheme.
Westpac’s NZ general manager of commercial Simon Power says the scheme will help businesses meet their financial obligations over the coming weeks and months.
“Many businesses have fixed costs that they need to continue to pay even though they are not trading at the moment,” Power said. “These are things like rent, vehicle leasing and staff salaries.
“These loans will provide a source of cashflow so costs can be managed, offering a degree of certainty to businesses so they can plan their resumption of business activities.”
ASB’s chief executive Vittoria Shortt says the financial stability of its customers is “top of mind,” and that ASB would be talking through whether taking on debt is the right option for them.
“Doing right by our customers involves having genuine and honest conversations,” she stated. “We are working hard to help Kiwis get through, but the reality is for some businesses, increasing levels of debt might not be the best option for them long term. There will be some tough conversations ahead but that is our job as responsible lenders.”
BNZ is encouraging its customers to look at every option available to them, and says it is ready to process loans under the Guarantee scheme as needed.