$590m loan scheme not in Budget

A small business loan scheme that has already seen more than $500 million paid out from Government coffers was not in the Budget.

As of 9am Friday, more than 33,000 businesses had applied to the small business cashflow loan scheme, with 31,000 loans approved.

The value of the loans applied for is just under $590m and so far $530m has been approved, according to Inland Revenue, which is processing the applications.

The loan scheme, which is interestfree if paid back in the first year, opened to applications on Tuesday after being announced on May 1 by the Finance Minister, Grant Robertson.

Robertson said as of Friday Inland Revenue had seen 10 applications a minute in the first few days, but that had since dropped back to six a minute.

Accounting firm Deloitte has estimated the cost of the scheme could run into the billions of dollars.

In a note earlier this month, it said that if all 213,599 self-employed people who had received the employer wage subsidy applied for the scheme it would be the equivalent of $2.5 billion.

On top of that would be businesses who employ others.

“A further 213,239 employers have applied for and received the wage subsidy, of which a large number would be eligible for a loan.”

There are about 400,000 businesses in New Zealand with 50 or fewer full-time equivalent staff.

But don’t expect to see any numbers for the cost of that scheme in the Budget.

The statement said while there was usually a moratorium in place on government financial decisions from the time Cabinet made Budget decisions until Budget day, the swiftly evolving health-related and economic impact of Covid-19 had meant the Government continually needed to make decisions to respond to the crisis.

“As a result, the Budget documents . . . do not capture all Government decisions that have been made by Budget Day.”

The Treasury statement said given its forecasts incorporated the full amount of funding made available by the Government, the individual decisions taken since the finalisation of the forecasts did not significantly alter its overall view of the economic and fiscal outlook.