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Business Finance Guarantee Scheme

This government backed loan scheme can assist small and business owners to obtain loans for cashflow support or plans requiring finance for assets to grow businesses in recovering from the impacts of the Coronavirus pandemic. These are available until until 30 June 2021. 

The Business Finance Guarantee scheme encourages banks to provide loans as the Government is taking up to 80% of the loan’s default risk. Those who borrow under this scheme must still pay back the debt normally, with interest to the loan provider. 

What it entails 

A loan is available if your business, be it a company, sole trader, partnership or trust, needs assistance for cashflow, assets to create income earning potential or responding to or recovering from the impacts of the Coronavirus pandemic.  

Banks in the scheme are: ANZ, ASB, BNZ, Heartland Bank, Kiwibank, TSB and Westpac. 

If you borrow from a bank, they will decide on the amount you can borrow and the length of the term, under one or more scheme loans up to a maximum of: 

$5 million for five years 

The scheme is available until 30 June 2021

Note that this guarantee does not excuse you from meeting your business’ liability for the debt. If you do not repay the loan, the bank will follow its normal processes to recover the debt. They can claim 80% of the defaulted scheme loan debt not recovered from the government. This is to encourage them to lend where otherwise they might not.  

Talk to your bank manager to see if you are eligible for credit using the Business Finance Guarantee.  

Your business doesn’t have to take ordinary loans first before applying for a Business Finance Guarantee Scheme loan.  

The bank will determine: 

  • The amount available to be provided and the term of the loan. 
  • Interest rate applicable 
  • Proof that will show your business can afford to repay the debt, being cashflow forecasts, a business plan or details of the businesses assets 

The loan agreement is between your business and the lender, so your business is liable and must pay the debt back, with interest, in the usual way. 

Eligibility is determined by  

-New Zealand based business 

This is not for residential or commercial property development 

If borrowing from a bank: 

  • Have an annual turnover of $200 million or less in the most recently completed financial year 
  • Not be on its credit watchlist  

This type of loan cannot be used for: 

  • Paying dividends or on-lending  
  • Refinancing existing loans you already have that exceeds of the agreed limits under other loans and facilities with your bank 
  • Re-financing or repaying more than 20% of your business’ existing debt.  

This loan is not available for businesses that: 

  • Manufacture cluster munitions, anti-personnel mines, tobacco, civilian automatic and semi-automatic firearms, magazines or parts 
  • The manufacture or testing of nuclear explosive devices 
  • The manufacture or distribution of recreational cannabis 
  • The processing of whale meat 
  • Any activity which is illegal in New Zealand. 

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