Chris Small: ABC Business Sales managing director on businesses reaching the cut-off point to pay back Covid loans

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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Episode Transcript

Speaker 1 (00:00):
Heather, do now, speaking of businesses, do you remember those
small business loans that Grant and just Sinder handed out
at the heights 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 2 (00:18):
Now, hey, Chris, hey, here here are you going?

Speaker 1 (00:21):
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 2 (00:30):
Is it your spot on? Yeah, it's very unlikely. And
given the security position that the government had, it was
actually unsecured loan, so they're not walking on particularly strong
footing when it comes to trying to receive it either.

Speaker 1 (00:44):
Okay, So what's gone on here? Have the businesses folded?
Have they just decided they're not going to pay it back?

Speaker 2 (00:49):
What? Well, when you think about it, when it was
first off it was interest free for a year and
then it moved to three percent after that for next
four years. Generally, an unsecured business loan will be it
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 just

(01:10):
pretend it's not there, because 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 at the high proportion
of these businesses with sold traders and businesses with fewer
than six full time staff.

Speaker 1 (01:27):
It's not as if we've left things for five years.
Is 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.

Speaker 2 (01:35):
It, Yes, But minimal I think, you know, really they
put the government put there, especially the previous going to
put their head in the sand through this.

Speaker 1 (01:44):
Money 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 back.

Speaker 2 (01:51):
Here it is I suspect will strong to suspect that'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. Yeah, the government doesn't have the ability

(02:13):
to 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 that. And that's if they're still around.

Speaker 1 (02:25):
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 2 (02:33):
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 1 (02:44):
I mean, Chris, this is one oh one about lending money.
You make sure it's secured. You know, you lend a
reasonable rate. So this is this is going to be
one of the dumbest things that you've seen happened.

Speaker 2 (02:55):
Surely, well absolutely, I mean, who wouldn't take the money
interest free for the first 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 1 (03:14):
Yeah, pretty remarkable. Chris, Thank you very much, really appreciated.
Chris Small, Managing director, ABC Business Sales. For more from
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