The Business Finance Guarantee Scheme (BFGS) is coming to a close and will conclude on 30 June 2021.
The Scheme was established in March 2020 to support small and medium businesses to access credit for cashflow, capital assets and projects related to, responding to, or recovering from, the impacts of COVID-19.
The Government-backed scheme was an immediate temporary measure to help lenders provide credit to viable businesses. It encourages banks, non-bank deposit takers (non-banks) and non-deposit taking lenders to lend where otherwise they may not, by the Government taking up to 80% of the loan’s default risk. Borrowers are still liable and must pay back the debt, with interest, in the usual way.
A BFGS loan must be approved, signed and documented by 30 June 2021 for inclusion in the scheme – however it does not have to be drawn down. Each lender has its own processes and cut-off times for applications under the scheme and will make their own lending decisions.
As at 11 May, lending of $2.4bn has been made available by banks and non-bank lenders using the scheme.
Information and data on BFGS is available here on the Treasury website: Business Finance Guarantee scheme
The Small Business Cashflow Scheme (SBCS) to support small to medium businesses and organisations struggling with a loss of actual revenue due to COVID-19 remains open until 31 December 2023. More information on SBCS is available on the Inland Revenue website.
The Reserve Bank – Te Pūtea Matua’s Term Lending Facility (TLF), which has supported the BFGS, will also close. The last scheduled Facility window runs from 26-28 July 2021. The TLF has been available to eligible counterparties since May 2020. To date, $1.46 billion has been borrowed through the TLF. The TLF aimed to ensure access to funding for banks at low interest rates for up to 5 years' duration.