Banks have loaned just $23 million to smaller businesses under a $6.25 billion government-backed scheme, disappointing economists.
The money has gone to 174 struggling businesses through nine banks, according to the New Zealand Bankers' Association.
"Ouch, that's disappointing," economist Shamubeel Eaqub says. "It should be in the billions."
The Business Finance Guarantee Scheme allows banks to loan up to $500,000 to businesses impacted by COVID-19, with the Government promising to pay 80 percent of any defaults.
Bankers' Association chief executive Roger Beaumont admitted the amount loaned was 'soft', however, that was not the banks' fault.
"There were quite strict criteria around who was eligible for the [Finance Guarantee] scheme."
He said banks had loaned an extra $7.2 billion outside the scheme, through other financing options.
Newshub requested the amount loaned under the scheme weeks ago.
"They [banks] were so embarrassed about it, they haven't released these numbers," Simplicity managing director Sam Stubbs said.
"Finally, they've been shamed into releasing them."
The Bankers' Association disputed that, saying the delay was because banks could not collect all of the data until now.
It was requesting data about the number of loan applications lodged and the amount declined.
Newshub has reported lots of profitable businesses being declined loans under the scheme.
A business owner who wanted to remain anonymous told Newshub she was declined a $50,000 loan under the scheme, because of a historic $50 overdraft that was repaid in five hours.
"It seemed very minor things that they were picking on, and they needed a reason to decline it," she said.
Stubbs said the Government was also responsible for the failed scheme.
"The Government should have allowed the money to be spent on websites or refinancing existing debt," he said.
"The Treasury are just not geared up to administer this, this is not their core competency."
Treasury refused to be interviewed by Newshub for this story, however, it made changes to the scheme last week following industry feedback and public criticism.
Newshub has learned bankers warned the Treasury the scheme would not work before it was announced on March 24.
Finance Minister Grant Robertson announced a new small business loan scheme last week, to be administered by Inland Revenue.
University of Canterbury Head of Economics and Finance Jedrzej Bialkowski said further changes to the existing guarantee scheme were required to make it worthwhile.
"Clearly something additional needs to be done, or the whole scheme will miss its own purpose."
He called for the Government guarantee to be increased to 100 percent, to reduce the risk to banks.