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New lenders make Business Finance Guarantee Scheme available to more small and medium business

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The Government-backed Business Finance Guarantee Scheme is now available to more small and medium businesses with the scheme now including five non-deposit taking lenders (NDTLs).

Acting Deputy Secretary Financial and Commercial at The Treasury Andy Hagan said the move to include NDTLs opens more lending for businesses who could benefit during their recovery from or response to COVID-19.

“NDTLs traditionally lend to the small and medium business sector including financing working capital and purchase of revenue generating assets.  

“By providing the Business Finance Guarantee Scheme to NDTLs more of these small and medium businesses will be able to borrow to adapt to a new way of operating post-COVID.”

The Business Finance Guarantee Scheme is now available via the following NDTLs:

  • UDC Finance Limited
  • Prospa NZ Limited
  • FlexiGroup (New Zealand) Limited
  • Zip Business New Zealand Limited
  • Speirs Finance Group Ltd

It’s important to note that borrowers are still liable and must pay back the debt, with interest, in the usual way. The scheme is open until 30 June 2021,” Andy Hagan said.

Changes made to the Scheme last year, which included allowing the credit provided to be used for capital investment, lifting the maximum loan size to $5 million and extending the loan term to up to five years, have resulted in increased uptake.

As at 16 March 2021, total approved exposure stood at $1.78 billion to 2,449 borrowers. Monthly reporting as at 31 January 2021 shows that 36% of the lending was in Auckland, Canterbury 13% and Waikato and Manawatu-Wanganui 11% and 10% respectively. Retail and Wholesale trade each accounted for 11% of the lending with construction and farming 9% each, accommodation & food services, transport and other manufacturing each accounting for 8% of the lending.

Under the Scheme, the Crown underwrite 80 percent of the credit risk on any defaulted scheme loan debt not recovered.

More information is available here.

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