The Government-backed Business Finance Guarantee (or BFG) scheme has been an epic failure. The scheme was too restrictive and there was too much red tape. The Government set aside $6b+ for the scheme when the scheme was announced. However, to date, only $150m has been lent to 780 customers.
Today, the Finance Minister has announced some much-welcomed extensions to the scheme.
What has changed:
- The scope of the loans has expanded from supporting COVID-19 impacted cashflow to supporting businesses respond to, reposition and recover from the impacts of COVID-19
- The maximum loan amounts have increased from $500k to $5m; and
- The loans can now be used for capital expenditure.
- The maximum loan term has been extended from 3 years to 5.
- There is now an ability to refinance other debt under the scheme.
- The turnover cap for businesses has been expanded from $80m to $200m.
- There are no establishment or early repayment fees.
The funding available under the scheme is limited. Applications need to be made by 31 December 2020.
More detail can be found here: https://treasury.govt.nz/information-and-services/new-zealand-economy/covid-19-economic-response/measures/bfg
The loans still do not apply to residential or commercial property investment. We think the Government has missed an opportunity here as a housing shortage looms with the significant number of New Zealanders returning.
How to apply
Like the original scheme, applications are made through the participating banks (ANZ, ASB, BNZ, Heartland Bank, Kiwibank, SBS Bank, TSB, Bank of China and Westpac). Normal credit processes apply, so if you intend on applying you will need to pull together information to support your
application. What the bank will require will vary case by case, but we suggest at a minimum they will want your most recent financial statements and up to date forecasts/budgets (ideally three-way).