The Minister of Finance yesterday announced a number of changes to the Business Finance Guarantee Scheme (Scheme), in the hope that loans made under the Scheme (BFGS Loans) will now be available to more businesses.
To date, only $150 million of the $6.25 billion allocated to the Scheme has been lent. Critical changes have been made to the Scheme to address the low uptake, based on feedback from banks and their customers.
The changes are timely, and welcomed, given the resurgence of COVID-19 and re-introduction of restrictions on business operations.
The most significant changes include:
• Increasing the maximum amount of a BFGS Loan to $5 million (previously $500,000).
• Extending the maximum term of a BFGS Loan to five years (previously three years).
• Expanding on what BFGS Loans can be used for – including general purpose borrowing and capital expenditure or projects relating or responding to, and recovering from the impacts of Covid-19 (previously, this was limited to liquidity support/bridging finance)*.
• The maximum cap on annual revenue for a business to be eligible has been increased to $200 million (previously $80 million).
• BFGS Loans can now also be used to refinance up to 20% of a borrower’s existing debt (including business overdraft).
* BFGS Loans remain unavailable for residential or commercial property developers or investors.
To be eligible, you must be a New Zealand based business and not be on your bank’s credit watchlist as at 31 January 2020 (for retail customers) or 30 September 2019 (for non-retail customers). Applications for BFGS Loans are open until 31 December 2020 and are subject to a participating bank’s normal lending criteria and processes.
Banks that are participating in the Scheme include ANZ, ASB, BNZ, Bank of China, Heartland Bank, Kiwibank, SBS Bank, TSB and Westpac.
More information on the Scheme is available at Treasury’s website (https://treasury.govt.nz/information-and-services/new-zealand-economy/covid-19-economic-response/measures/bfg), including certain excluded activities that cannot be funded under the Scheme.
Our Banking and Finance team are here to help with all of your business’s funding needs – whether this be further borrowing, refinancing or restructuring of existing facilities, or assistance reviewing your existing loan facilities and obligations.
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