New Zealand’s banks are offering up to a total of $6.25 billion in guaranteed loans to businesses financially impacted by Covid-19. Eligible businesses can apply to their bank for new lending under the scheme from today.
“Businesses are at the heart of our economy and we know many are doing it tough as a result of Covid-19. We also know we need to work together to get through this. That’s why we are pleased to have reached an agreement with the Government that will help banks provide loans to businesses that have been financially impacted,” says New Zealand Bankers’ Association chief executive Roger Beaumont.
“The Business Finance Guarantee Scheme will provide individual business loans up to $500,000. To be eligible to apply to the scheme businesses must be New Zealand based with an annual turnover between $250,000 and $80 million.
Under the scheme banks will make available new lending to eligible businesses. The loans will be supported by a guarantee in a risk-sharing agreement with the Government. The Government will cover 80 per cent of the risk and banks will cover 20 per cent. That amounts to a total of $5 billion for Government and $1.25 billion for banks.
“Businesses seeking to apply for a loan under the scheme should visit their bank’s website for more information before contacting their bank to discuss their eligibility and the assessment process.
“Banks will follow their normal credit assessment process to see if businesses qualify for the scheme and will take into account the circumstances businesses find themselves in due to Covid-19. That process usually takes approximately ten working days.”
Supported loans are limited to a maximum term of three years, with the exact terms of individual loans to be determined by each bank.
The scheme rules exclude funding certain activities including agriculture, property development and property investment.
“Individual banks will of course continue to offer support to affected businesses outside the scope of the scheme,” says Beaumont.
Banks participating in the scheme include ANZ, ASB, BNZ, Heartland Bank, HSBC, Kiwibank, SBS Bank, TSB and Westpac.
Further information about the Business Finance Guarantee Scheme is available on participating bank websites.