• Loan guarantee scheme to support highly affected firms from North Island Weather Events
• Concessionary loan and equity finance access scheme targeted at viable firms unable to access lending

Cyclone Recovery Minister Grant Robertson said the Government is further supporting businesses, including growers and farmers affected by the North Island weather events earlier this year, by underwriting bank lending and offering cheaper finance options to ensure the long-term survival of critical regional industries.

“Businesses have been hard hit by the North Island weather events earlier this year and the impacts continue to be felt, particularly for those in the horticultural sector. This package was developed with primary producers and will provide relief to key growers, farmers and businesses and help their regions continue to recover.”

“There will be three components for different types of support: a loan guarantee scheme in partnership with banks and other lenders who choose to participate, and a concessionary loan and equity scheme run by Kānoa to help hard-hit businesses get to a position to be able to re-engage with their banks and work toward being cashflow positive again.

“The North Island Weather Events (NIWE) Loan Guarantee Scheme will provide relief to affected firms seeking commercial lending. This scheme leverages the Crown’s financial strength by carrying 80 percent of the credit risk on covered loans, allowing banks to reduce interest rates and offer more flexible terms.

“The Government’s underwrite will support loans of up to five years agreed by businesses and their banks of up to $10 million from the scheme, including refinancing of existing loans. For example, a reduction in interest rates of 0.3 percent to 1.5 percent would be equivalent of $9,000 to $45,000 in interest cost savings per year for the average supported firm, based on borrowings of $3 million. Over the five years the Scheme is in place, these savings could total between $45,000 and $225,000 for a firm with an average amount of debt, providing meaningful relief.

“Further details of the scheme will be announced in coming weeks. We are targeting around the end of July for the scheme to be up and running, providing time for banks to get systems in place. In the meantime, we expect customers will be able to register their interest in looking at utilising this scheme with their bank.

“Different businesses in the same industry, let alone across different industries, have all been affected by these weather events differently, meaning they all need slightly different recovery plans. That’s why this scheme isn’t going to be overly prescriptive and instead is about supporting banks and their customers to be able to get loan agreements in place. It is one part of our support for businesses affected by the weather events,” Grant Robertson said.

The package also includes the NIWE Primary Producer Finance Scheme to provide access to capital for affected growers and farmers unable to access lending without further support. The funding will be targeted towards severely affected businesses that have a reasonable likelihood of being commercially viable, but cannot currently access commercial finance.

Hawke’s Bay Lead Recovery Minister Kieran McAnulty said many businesses severely affected by the weather events are likely to be commercially viable with the right support.

“This scheme enables the Government to provide concessionary loans and equity finance for land-based primary sector producers up to $4 million per business from a pool of up to $240 million set aside in total.

“It will provide a way for businesses to fully re-engage with lenders at a later date, once we have helped them get back on their feet. This will in turn contribute towards their recovery, and provide better regional, social and economic outcomes in cyclone-affected regions,”

For more information: https://www.beehive.govt.nz/release/support-package-growers-farmers-and-businesses-affected-north-island-weather-events

1 July 2023

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