The government’s business assistance loan scheme during Covid-19 restrictions has room for improvement, according to an interim assessment.
The Ministry of Finance Evaluation of business finance guarantee schemes Conducted by Business and Economic Research Limited (BERL).
The general consensus has been found to be schemes that have achieved their purpose of providing credits to mitigate the impact of Covid-19 on small to medium-sized businesses.
But it said it initially had limited success because of the criteria banks must use to evaluate loan applications and strict restrictions on accessibility.
Scheme lending increased after the requirements were significantly adjusted.
The assessment also found that taking on more debt isn’t an ideal prospect for many companies.
Initial utilization was lower than expected, according to the report, and changes made to the program should have been included from the beginning, particularly non-bank lenders.
“Also, the need to engage with lenders that do not accept deposits (non-bank lenders) sooner, and the legal language of the scheme in our correspondence was offensive to some. I also learned,” said Peter Rowe of Export Credit.
“BERL noted that while the prospect of taking on more debt is not attractive for many companies, they could survive the pandemic if they were able to refinance some of their existing debt.
The evaluation also found that the process of establishing the scheme could have been improved.
But he said the government support had given the market confidence in a time of uncertainty.
“Reducing bank funding costs and corporate debt restructuring has helped many businesses survive the pandemic,” said Lowe.
https://www.rnz.co.nz/news/business/481291/covid-19-business-support-loan-scheme-had-room-to-be-better-review Covid-19 Business Support Loan Scheme Had Room for Improvement – Review