Date posted: 21/08/2020 2 min read

NZ business loan scheme expanded

After a slow uptake on the original scheme, the Government has announced an expanded loan scheme, including opening it up to more medium-sized businesses.

In Brief

  • The Business Finance Guarantee Scheme is made more flexible
  • Changes include longer loan terms and a higher maximum loan amount
  • The scheme is available until 31 December 2020

The Government has simplified and expanded the Business Finance Guarantee Scheme allowing banks to make more loans available to viable businesses under the Government’s 80 percent guarantee.

It says the changes should allow banks to be more flexible.

The updated the scheme is based on feedback from banks and their customers. Changes include longer loan terms and a higher maximum loan amount covered by the scheme.

The original scheme had a low uptake with $150 million lent to 780 customers.

Latest changes include:

  • Maximum loan limit increased from $500,000 to $5 million
  • Maximum term of loan increased from three years to five years
  • Criteria for borrowing extended from liquidity support/bridging finance to enable general purpose borrowing, including for capital investment, for businesses affected by COVID-19
  • More medium-sized firms can access these loans with revenue limits extended from $80m to $200m per annum.
  • Scheme available until 31 December 2020
  • BFGS loans can be used to re-finance up to 20 percent of a borrower’s existing indebtedness
  • Watchlist criteria relaxed Personal guarantee requirement clarified – there is no personal guarantee required by the Crown. The Crown will pay a claim in event of default where no personal guarantee has been provided
  • Discretion available for banks to act outside Supported Loan Policies, Practices, and Processes.

The Business Finance Guarantee Scheme supports the provision of bank loans to viable businesses, encouraging banks to lend where otherwise they may not, by the Government taking on the default risk for the bank of up to 80 percent of the loan. Borrowers are still liable and must pay the debt back, with interest, in the usual way.

Businesses seeking to access the scheme should contact their bank. Participating banks are ANZ, ASB, BNZ, Heartland Bank, Kiwibank, SBS Bank, TSB, Bank of China and Westpac.

Business Finance Guarantee scheme

The Treasury’s website has comprehensive information on the Business Finance Guarantee Scheme, including latest changes.

Read more

Small Business Cashflow Loan Scheme

The scheme provides assistance of up to $100,000 to firms employing 50 or fewer full time equivalent employees.

Read more