14.04.2020

COVID-19: Business Finance Guarantee Scheme – loan applications now open

Businesses can now start applying to their banks for loans under the $6.25 billion Business Finance Guarantee Scheme (“BFGS”), set up to support small and medium-sized businesses during the COVID-19 pandemic.  Details regarding applications can be found on your bank’s website.  Whilst there are some differences, the loans offered by the five major retail banks generally have the following key terms and eligibility criteria:

Key terms:

  • Available until 30 September 2020.
  • A facility limit of up to $500,000.
  • A maximum term of three years.
  • As with any other loan, the loan must be fully repaid, together with interest and fees.
  • The bank may require security.
  • The loan cannot be used to fund:
    • capital assets/projects other than ‘business as usual’ expenditure which does not exceed 5% of the principal amount of the loan;
    • dividends distributed, nor on-lending, outside the borrower’s guaranteeing group; and
    • the re-financing of facilities advanced before 16 March 2020.

Eligibility criteria:

  • Your business must:
    • be New Zealand-based and an existing customer of the bank;
    • have annual turnover between $250,000 and $80,000,000;
    • operate in an eligible sector – with property development, property investment and agriculture notable amongst the excluded sectors; and
    • have urgent need for liquidity or bridging financing caused by COVID-19 disruption.
  • Subject to limited exceptions, the loan will only be made after your business has fully drawn down on/exhausted its existing facilities.
  • Other terms and conditions and credit criteria apply.

Next Steps

If you have any questions about the BFGS Loan being offered to your business, please get in touch with our business advice team.

All of the latest Government information for businesses in relation to COVID-19 can be found on the business.govt.nz website: https://www.business.govt.nz/news/coronavirus-information-for-businesses/.  We suggest that this is reviewed on a regular basis to ensure that you have the most up to date information.

Disclaimer:  The information contained in this article is current at the date of publishing and is of a general nature.  It should be used as a guide only and not as a substitute for obtaining legal advice.  Specific legal advice should be sought where required.

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Contact the expert team at Hesketh Henry.
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