Nearly one billion dollars is still owed as the deadline for Covid-era loans approaches.
Inland Revenue says many Small Business Cashflow loans will default in June if not paid off.
About 130,000 businesses were issued the loans, totalling $2.4 billion.
ABC Business Sales Managing Director Chris Small told Mike Hosking he's not surprised so many owners haven't paid it back yet.
He says there were no personal guarantees or general security agreements, so it was a free hit for business owners.
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Speaker 1 (00:00):
We might have a bubbling or a building fiscal problem
for some small businesses who borrowed money during COVID. Our
deadline for payback is June. We got about a billion
a billion still owing. Ten thousand businesses are already behind
in payments to the tune of one hundred and sixty
one million. The default interest is almost eleven percent. Managing
director of ABC Business Sales, Chris Smallbeck, Well, this Chris,
very good morning to you.
Speaker 2 (00:20):
We might be doing very well.
Speaker 1 (00:22):
Indeed, thank you. No security on the loans at the time.
In other words, if you said you needed them, you
got it. Was that a risk?
Speaker 2 (00:28):
Yeah, it's a huge risk, Mike. You know in hindsight
that the previous regime could look back. I'm sure they
would wind it back and put a few more bells
and braces in there, because what they're now finding is
people basically took the money thinking it was unlikely they're
going to pay it back, and sure enough they haven't
paid it back with little consequences. No security was taken
(00:48):
in the way pg's personal guarantees or any GSAs over
the businesses, so it was a real free hit for
the business owner at the time.
Speaker 1 (00:55):
So where where does the responsibility set. Ultimately, is the
business owner going to get pinged in some way if
they don't pay it back or not, And if they do,
what does that mean for the business community in general? Now,
are we going to see whole bunch of small companies go.
Speaker 2 (01:07):
Under No, I don't believe so, because there was no
security taken, so their houses aren't at risk, no personal guarantees,
so they can't get personally bankrupted. All the ID from
what I haven't seen, the RED can do is put
the list to fauld interest. Rate Y said, it will
keep mounting up and capitalizing. And certainly the sole traders position,
they may just walk away and set up a new
(01:28):
entity or just ignore it. But I don't think it's
realistic for the IOD to go around and just administration
to speak of these one hundred and twenty odd thousand
people to chase. It's just not going to happen. So
it's just it was a balls up that's going to
cost US hundreds of millions of dollars unfortunately.
Speaker 1 (01:45):
So we're on the hook for that. It's money. At
what point, I don't know, if this is a new wheelhouse,
At what point does a government because this will be
on the government books as as a you know it's
coming back, it's our money, will get it. At what
point do they then write that off and go we'll
never see it again.
Speaker 2 (01:59):
Well they won't certainly won't do it this regime. It's
a bit like student loans. They never really wipe them off.
They to see them go for perpetuity and keep saying
it's on the balance sheet, but that the realistic situation
is I'll never see the money, a fair bit of
it anyway.
Speaker 1 (02:12):
Jee talk to me while I've got you. The market
for sales and business generally, are we are we bullish?
Are we seeing any light? Are we still turning over?
Speaker 2 (02:20):
Yeah? Good, good question. So we just we just finalized
numbers to the end of Feb sits. In the eleven
months we were fifteen percent up on transactions, largely driven
by unskilled ethnic groups coming into New Zealand, Indians, Filipinos,
Chinese buying businesses like service stations, fruits stores, bottle stores.
(02:40):
So up hasn't really been a drop off in business sales,
but that's largely driven by unemployment and unskilled immigration coming
into New Zealand. So we're a little bit charcacistical. Well,
good for business, but good for business sales? Is it
good for New Zealand? And these people do bring workI
fick to the economy. And you know, small businesses are
(03:01):
the lifeblood of New Zealand. So I don't think it's
necessarily a bad thing. There's plenty of put this a way,
there's plenty of keys who don't want to buy these
types of businesses, well, those types of ours. So I
think we need that.
Speaker 1 (03:11):
Balance to I broadly like it, but I do worry
about when you say unskilled, how does an unskilled person
get into the country.
Speaker 2 (03:20):
Well, without Delvin and too deep. They seem to have
relations and cousins, ands and new news who live here.
I think there's some expert on immigration, but it seems
to be the large driver that the reason is large
families who have sort of multiple touch points in New Zealand.
Speaker 1 (03:36):
So up fifteen percent. All right, Chris, nice to talk
to you, appreciate it. There's always Chris small ABC business Sales.
I'm sure there's a conversation that we had with Erica
Stanford there somewhere, isn't there for more from the Mic
Asking Breakfast Listen Live to News talks that'd be from
six am weekdays, or follow the podcast on iHeartRadio
We might have a bubbling or a building fiscal problem
for some small businesses who borrowed money during COVID. Our
deadline for payback is June. We got about a billion
a billion still owing. Ten thousand businesses are already behind
in payments to the tune of one hundred and sixty
one million. The default interest is almost eleven percent. Managing
director of ABC Business Sales, Chris Smallbeck, Well, this Chris,
very good morning to you.
Speaker 2 (00:20):
We might be doing very well.
Speaker 1 (00:22):
Indeed, thank you. No security on the loans at the time.
In other words, if you said you needed them, you
got it. Was that a risk?
Speaker 2 (00:28):
Yeah, it's a huge risk, Mike. You know in hindsight
that the previous regime could look back. I'm sure they
would wind it back and put a few more bells
and braces in there, because what they're now finding is
people basically took the money thinking it was unlikely they're
going to pay it back, and sure enough they haven't
paid it back with little consequences. No security was taken
(00:48):
in the way pg's personal guarantees or any GSAs over
the businesses, so it was a real free hit for
the business owner at the time.
Speaker 1 (00:55):
So where where does the responsibility set. Ultimately, is the
business owner going to get pinged in some way if
they don't pay it back or not, And if they do,
what does that mean for the business community in general? Now,
are we going to see whole bunch of small companies go.
Speaker 2 (01:07):
Under No, I don't believe so, because there was no
security taken, so their houses aren't at risk, no personal guarantees,
so they can't get personally bankrupted. All the ID from
what I haven't seen, the RED can do is put
the list to fauld interest. Rate Y said, it will
keep mounting up and capitalizing. And certainly the sole traders position,
they may just walk away and set up a new
(01:28):
entity or just ignore it. But I don't think it's
realistic for the IOD to go around and just administration
to speak of these one hundred and twenty odd thousand
people to chase. It's just not going to happen. So
it's just it was a balls up that's going to
cost US hundreds of millions of dollars unfortunately.
Speaker 1 (01:45):
So we're on the hook for that. It's money. At
what point, I don't know, if this is a new wheelhouse,
At what point does a government because this will be
on the government books as as a you know it's
coming back, it's our money, will get it. At what
point do they then write that off and go we'll
never see it again.
Speaker 2 (01:59):
Well they won't certainly won't do it this regime. It's
a bit like student loans. They never really wipe them off.
They to see them go for perpetuity and keep saying
it's on the balance sheet, but that the realistic situation
is I'll never see the money, a fair bit of
it anyway.
Speaker 1 (02:12):
Jee talk to me while I've got you. The market
for sales and business generally, are we are we bullish?
Are we seeing any light? Are we still turning over?
Speaker 2 (02:20):
Yeah? Good, good question. So we just we just finalized
numbers to the end of Feb sits. In the eleven
months we were fifteen percent up on transactions, largely driven
by unskilled ethnic groups coming into New Zealand, Indians, Filipinos,
Chinese buying businesses like service stations, fruits stores, bottle stores.
(02:40):
So up hasn't really been a drop off in business sales,
but that's largely driven by unemployment and unskilled immigration coming
into New Zealand. So we're a little bit charcacistical. Well,
good for business, but good for business sales? Is it
good for New Zealand? And these people do bring workI
fick to the economy. And you know, small businesses are
(03:01):
the lifeblood of New Zealand. So I don't think it's
necessarily a bad thing. There's plenty of put this a way,
there's plenty of keys who don't want to buy these
types of businesses, well, those types of ours. So I
think we need that.
Speaker 1 (03:11):
Balance to I broadly like it, but I do worry
about when you say unskilled, how does an unskilled person
get into the country.
Speaker 2 (03:20):
Well, without Delvin and too deep. They seem to have
relations and cousins, ands and new news who live here.
I think there's some expert on immigration, but it seems
to be the large driver that the reason is large
families who have sort of multiple touch points in New Zealand.
Speaker 1 (03:36):
So up fifteen percent. All right, Chris, nice to talk
to you, appreciate it. There's always Chris small ABC business Sales.
I'm sure there's a conversation that we had with Erica
Stanford there somewhere, isn't there for more from the Mic
Asking Breakfast Listen Live to News talks that'd be from
six am weekdays, or follow the podcast on iHeartRadio
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