Businesses throughout New Zealand have now applied for nearly $1 billion worth of interest-free loans in two weeks.
Earlier this month, the Government announced the Small Business Cash Flow Scheme, with loans able to be used for core business operating costs, such as rent, insurance, utilities, or rates, and available for any business to remain open during the COVID-19 crisis. Depending on the size of the business, loans could be between $10,000 and $100,000.
"Cash flow is crucial to kick-starting the economic recovery for our small business," said Stuart Nash, Small Business Minister.
"More than 55,000 businesses have applied for around $960 million in interest-free loans. We expect to pass the billion-dollar mark within the next day or so."
The eligibility criteria for the loans were the same as the wage subsidy scheme, where businesses had to prove a 30 percent drop in income because of COVID-19.
Companies also had to declare they are a viable business and will use the money for core business operating costs, while also entering into a legally binding contract.
"Around 95 percent of the loans have already been approved and cash usually arrives in bank accounts within five days," Nash said.
"The interest-free loans have come at just the right time."
Ninety percent of those who applied for a loan were from firms with 10 or less staff, with the average loan equalling about $17,300, the Government says.
Along with that, 88 percent of those seeking loans also got support from the wage subsidy.
The scheme allowed a wide range of businesses to apply including construction, accommodation providers, and retail.
Nash said it was much-needed capital for small businesses.
"Provincial businesses are making good use of Government lending. Tauranga businesses account for 2528 applications; there are 1575 from Palmerston North; 1482 from Whangarei; 1240 from Nelson, and 1181 applications from Napier businesses.
"Applications are due by June 12 but I am seeking advice on extending the deadline given the substantial demand for the loans."