- The specific details of this initiative are being finalised and agreed urgently and the Government will make these public in the coming days.
- The Reserve Bank has agreed to help banks put this in place with appropriate capital rules. In addition, it has decided to reduce banks ‘core funding ratios’ from 75 percent to 50 percent, further helping banks to make credit available.
- The Government is announcing this now to give people and businesses the certainty of cushioning the blow of Covd-19.
- The Business Finance Guarantee Scheme will provide short-term credit to cushion the financial distress on solvent small and medium-sized firms affected by the COVID-19 crisis.
- This scheme leverages the Crown’s financial strength, allowing banks to lend to ease the financial stress on solvent firms affected by the COVID-19 pandemic.
- The scheme will include a limit of $500,000 per loan and will apply to firms with a turnover of between $250,000 and $80 million per annum. The loans will be for a maximum of three years and expected to be provided by the banks at competitive, transparent rates.
- The Government will carry 80% of the credit risk, with the other 20% to be carried by the banks.
As is the case with the wage and leave subsidies, we suggest you consult your advisers in the first instance.