ANZ: Uptake of Govt loans slow

AUCKLAND: ANZ Bank New Zealand and many of its business customers' balance sheets were in much better shape heading into the Covid19 crisis than they were before the Global Financial Crisis, chief executive Antonia Watson said.

That is one reason ANZ has approved only a small number of loans under the business finance guarantee scheme [BFGS], of which the Government is guaranteeing up to 80%.

ANZ's parent reported the NZ arm had received 820 requests for BFGS loans and it is closer to 1000 approaches now, Ms Watson said.

‘‘We have had some approvals — it is absolutely a small number,’’ Ms Watson said.

‘‘Businesses are just about to switch from, ‘what's my immediate cash needs and how can I reduce my costs?' to looking at their longerterm needs and rebuilding their businesses.’’

The Government's wage subsidy of $585.80 per fulltime worker per week for 12 weeks has had ‘‘a huge impact on business liquidity’’, and that is another reason the loan scheme had got off to a slow start, she said.

The wage subsidy has helped many businesses deal with the immediate impact of the Covid19 crisis and Alert Level 4 lockdown.

‘‘It feels like businesses have come into this very difficult period of time in pretty good shape,’’ Ms Watson said.

On average, firms' working capital overdrafts are drawn to only about 34%.

‘‘I think this one — the BFGS — is going to be a pretty slow burn. We certainly weren't expecting there to be a huge rush of money out the door.’’

The Government has provided $6.25 billion for loans of up to three years to businesses with turnover between $250,000 and $80 million under the scheme.

While there have been complaints from some that banks are demanding additional security and personal guarantees from business owners trying to access the loans, Ms Watson said the scheme requires banks to do this.

The Government's own website dedicated to information on what aid is available to businesses during the Covid19 crisis makes it clear that the BFGS is a loan that has to be repaid.

‘‘Sometimes, if there's not much security in the business, we are requiring a personal guarantee,’’ Ms Watson said.

‘‘It's more a sign of ‘are you backing your business to get through this?’’’

Despite the slow uptake to date, ‘‘the guarantee scheme is going to be a really important part of the rebuilding stage’’, Ms Watson said.

‘‘There are people out there who are doing it tough. Some businesses won't be viable in the long term.’’ — BusinessDesk

❛ The wage subsidy has given an incredible amount of liquidity to

businesses

ANZ Bank New Zealand chief

executive Antonia Watson