Nats propose grants, loans at $8b cost

National Party leader Simon Bridges has proposed giving businesses cash grants and lowinterest loans at a cost to the Government of $8 billion.

He said more needed to be done to help small firms survive the next few months.

Bridges has suggested that businesses that can prove a 50 per cent drop in revenues across two successive months because of the Covid-19 lockdown should get grants of up to $100,000 in the form of a refund of the GST they paid in the second-half of last year.

If businesses paid more than $100,000 in GST over the period, they should also be entitled to a five-year loan of up to $250,000 from the Government on which they would only pay interest at the rate of 0.7 per cent a year.

The National Party has estimated 160,000 firms would be eligible for the grants or loans and that they would cost the Government a total of $8 billion.

Bridges has proposed the aid as an alternative to the Government’s ‘small business cashflow scheme’ that was announced by Finance Minister Grant Robertson on Friday.

The government scheme would entitle firms that had up to 50 staff, including the self employed and sole traders, to somewhat lessgenerous loans of between $11,800 and $100,000, depending on how many employees they had.

Businesses will need to pay a 3 per cent annual interest rate on those loans, which will also have a maximum term of five years, unless they pay the loans back within a year, in which case they will be interest-free.

Applicants will need to attest that they have suffered a 30 per cent drop in revenues during one month between January and June because of the coronavirus.

Inland Revenue will manage the government scheme, which will not require business owners to put up security for the lending.

Bridges said the key points of difference between National’s proposal and the Government’s loan scheme was that the aid provided through National’s plan would be ‘‘more generous, more targeted, and linked to businesses’ prior revenue’’.

While the help would be available to businesses regardless of size, it would primarily benefit small businesses because of the cap on the size of individual loans and grants, he said.

‘‘It’s not right that small business should be left to carry so much of the economic suffering.

‘‘Let’s face it – these businesses have been forced to shut down in the national interest. It is in the national interest to keep them afloat.’’

The pace of business failures and job losses was accelerating, Bridges said.