The New Zealand Government’s Covid-19 business finance guarantee scheme, introduced to assist businesses by providing a lending facility where the Government guaranteed banks would be repaid 80 percent of the funds advanced, lent out just NZ$150 million out of $6.25 billion originally allocated.
Now it has been extensively revised: it is now aimed at larger businesses, and can also now be used to refinance up to 20 percent of a borrower's existing indebtedness.
Other changes to the scheme include increasing the maximum loan limit from $500,000 to $5 million, extending the maximum term from three to five years and increasing the size of eligible firms from those with up to $80 million in annual revenue to up to $200 million.
The loans can also be used for a wider range of general business purposes, including capital investment, rather than just for liquidity and/or bridging finance.
In conjunction with the review of the Government’s Business Finance Guarantee Scheme the Reserve Bank of New Zealand has revised operational details of the Term Lending Facility (TLF). Under the revised facility, the Reserve Bank will continue to offer to lend funds to banks at the Official Cash Rate, however the term has been extended to five years from three years. The new facility will be available to use from 26 August and now runs through to 1 February 2021.