Time is running out for businesses who took out a Covid Small Business Cashflow Scheme.
It's five years today since Inland Revenue introduced the loans.
They were issued to more than 129,000 businesses and totalled $2.4 billion.
The IRD says they're now reaching their cut-off point, and default loans not paid in full will be enforced.
ABC Business Sales managing director unveils how many businesses are still owing - and by how much.
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Speaker 1 (00:09):
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Heather do for us.
Speaker 2 (00:17):
Now, speaking of businesses, do you remember those small business
loans that Grant and just Sinder handed out at the
height of the pandemic in twenty twenty. Well, they were
all supposed to be paid back within five years, which
means they're coming up do you write about now? But
there's still about nine hundred million outstanding. Chris Small is
managing director at ABC Business Sales and with US.
Speaker 3 (00:35):
Now, Hey, Chris, hey, here here you going.
Speaker 2 (00:38):
I'm very well. Thank you. Now, if nine hundred million
is still paid back, and it was also is still outstanding,
and it was all supposed to be paid back within
five years, I would say a lot of that is
not coming in.
Speaker 3 (00:46):
Is it your spot on? Yeah, it's very unlikely. And
given the security position that the government title was actually
an unsecured loan, so they're not walking on particularly strong
footing when it comes to trying to receive it either.
Speaker 2 (01:01):
Okay, so what's gone on here? Have the businesses folded?
Have they just decided they're not going to pay it back?
Speaker 3 (01:06):
What? Well, when you think about it. When it was
first off that it was interest free for a year,
and then it moved to three percent after that for
the next four years. Generally an unsecured business loan would
be anywhere from sort of goodness eight to twelve percent,
So of course everyone was going to take it if
you're a sensible business person. And then I suspect that
they've just really put their heads in the sand and
(01:27):
just pretend it's not there, because you know, three percent,
there's not a lot to be paying back on an
interest only basis. And there's probably also a few of
them that are probably not no longer around because a
high proportion of these businesses were sold traders, and businesses
were fewer than six full time staff.
Speaker 2 (01:43):
It's not as if we've left things for five years,
is it. It's not like we said here's your money in
twenty twenty and then we're going to leave it. There
has been some contact with these people, hasn't there?
Speaker 3 (01:54):
Yes? But minimal I think, you know, really they put
the government put there, especially the previous don't put their
head in the sand through this money.
Speaker 2 (02:01):
Possible, Chris, If there's been minimal contact, is it possible
that some of these people just forgot and all of
a sudden, oh jeez, yeah, I've got to pay the
money here.
Speaker 3 (02:08):
It is I suspect will strive to suspect that it's
a very small proportion. I suspect they will struggle to
get the majority of this money back because either a
they can't afford it. Be what you remember as a
business owner is more than like you're going to have
a home loan mortgage, so that'll take priority because if
he doesn't pay that, the bank will come in and
take his house. The government doesn't have the ability to
(02:30):
do that. They don't have a personal guarantee, they don't
have a mortgage on his business or his house. So
they're going to be a lot lower in the pecking
order when it comes to who a business owner decides
to pay back. And that's if they're still around.
Speaker 2 (02:42):
I mean, I can't believe that I'm actually saying this,
But we've learned a lesson, haven't we? As if we
did as if we learned needed to learn this lesson.
We have learned a lesson here.
Speaker 3 (02:50):
Yeah, we've learned the hard way. That's nine hundred million
that potentially could go towards hospitals, education, lots of other
good stuff, but in the end, we we basically gave
it away.
Speaker 2 (03:01):
I mean, Chris, this is one oh one about lending money.
You make sure it's secured, you know, you lend it reasonable.
So this is this has got to be one of
the dumbest things that you've seen happen.
Speaker 3 (03:11):
Surely well absolutely, I mean, who wouldn't take the money
interest free for the first year and then moves to
three percent and it's unsecured. I mean I would have.
We didn't take any because we were I guess we've
got to act with ethics and integrity, but I think
a lot of New Zealanders would have taken that and
who knows what A what they did with the money,
and b who knows where they are now.
Speaker 2 (03:31):
Yeah, pretty remarkable, Chris, Thank you very much, Really appreciated.
Chris small, Managing Director, ABC Business Sales.
Speaker 1 (03:37):
For more from News Talks at B listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iart Radio.
You're listening to a podcast from News Talks'd be follow
this and our wide range of podcasts now on iHeartRadio.
Heather do for us.
Speaker 2 (00:17):
Now, speaking of businesses, do you remember those small business
loans that Grant and just Sinder handed out at the
height of the pandemic in twenty twenty. Well, they were
all supposed to be paid back within five years, which
means they're coming up do you write about now? But
there's still about nine hundred million outstanding. Chris Small is
managing director at ABC Business Sales and with US.
Speaker 3 (00:35):
Now, Hey, Chris, hey, here here you going.
Speaker 2 (00:38):
I'm very well. Thank you. Now, if nine hundred million
is still paid back, and it was also is still outstanding,
and it was all supposed to be paid back within
five years, I would say a lot of that is
not coming in.
Speaker 3 (00:46):
Is it your spot on? Yeah, it's very unlikely. And
given the security position that the government title was actually
an unsecured loan, so they're not walking on particularly strong
footing when it comes to trying to receive it either.
Speaker 2 (01:01):
Okay, so what's gone on here? Have the businesses folded?
Have they just decided they're not going to pay it back?
Speaker 3 (01:06):
What? Well, when you think about it. When it was
first off that it was interest free for a year,
and then it moved to three percent after that for
the next four years. Generally an unsecured business loan would
be anywhere from sort of goodness eight to twelve percent,
So of course everyone was going to take it if
you're a sensible business person. And then I suspect that
they've just really put their heads in the sand and
(01:27):
just pretend it's not there, because you know, three percent,
there's not a lot to be paying back on an
interest only basis. And there's probably also a few of
them that are probably not no longer around because a
high proportion of these businesses were sold traders, and businesses
were fewer than six full time staff.
Speaker 2 (01:43):
It's not as if we've left things for five years,
is it. It's not like we said here's your money in
twenty twenty and then we're going to leave it. There
has been some contact with these people, hasn't there?
Speaker 3 (01:54):
Yes? But minimal I think, you know, really they put
the government put there, especially the previous don't put their
head in the sand through this money.
Speaker 2 (02:01):
Possible, Chris, If there's been minimal contact, is it possible
that some of these people just forgot and all of
a sudden, oh jeez, yeah, I've got to pay the
money here.
Speaker 3 (02:08):
It is I suspect will strive to suspect that it's
a very small proportion. I suspect they will struggle to
get the majority of this money back because either a
they can't afford it. Be what you remember as a
business owner is more than like you're going to have
a home loan mortgage, so that'll take priority because if
he doesn't pay that, the bank will come in and
take his house. The government doesn't have the ability to
(02:30):
do that. They don't have a personal guarantee, they don't
have a mortgage on his business or his house. So
they're going to be a lot lower in the pecking
order when it comes to who a business owner decides
to pay back. And that's if they're still around.
Speaker 2 (02:42):
I mean, I can't believe that I'm actually saying this,
But we've learned a lesson, haven't we? As if we
did as if we learned needed to learn this lesson.
We have learned a lesson here.
Speaker 3 (02:50):
Yeah, we've learned the hard way. That's nine hundred million
that potentially could go towards hospitals, education, lots of other
good stuff, but in the end, we we basically gave
it away.
Speaker 2 (03:01):
I mean, Chris, this is one oh one about lending money.
You make sure it's secured, you know, you lend it reasonable.
So this is this has got to be one of
the dumbest things that you've seen happen.
Speaker 3 (03:11):
Surely well absolutely, I mean, who wouldn't take the money
interest free for the first year and then moves to
three percent and it's unsecured. I mean I would have.
We didn't take any because we were I guess we've
got to act with ethics and integrity, but I think
a lot of New Zealanders would have taken that and
who knows what A what they did with the money,
and b who knows where they are now.
Speaker 2 (03:31):
Yeah, pretty remarkable, Chris, Thank you very much, Really appreciated.
Chris small, Managing Director, ABC Business Sales.
Speaker 1 (03:37):
For more from News Talks at B listen live on
air or online, and keep our shows with you wherever
you go with our podcasts on iart Radio.
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