The government's new loan scheme has been criticised by the opposition for being half-baked and lacking in clarity.
Paul Goldsmith wants cash directed to those businesses that desperately need it. Photo: RNZ / Rebekah Parsons-King
Small and medium-sized businesses who employ 50 or fewer staff will be eligible for the loan, which could be as much as $100,000.
The loan will be zero percent interest for the first year, and will then increase to 3 percent for a maximum term of five years. Repayments are not required for the first two years.
But the National Party's Finance spokesperson, Paul Goldsmith, said the scheme needed to be more targeted.
"Rather than offering cheap loans to all sorts of companies, with very loose criteria, the government should be getting cash to those businesses that desperately need it," he said.
The eligibility criteria for the loan is the same as for the wage subsidy scheme.
"Businesses will also have to declare they are a viable business, and that they will use the money for core business operating costs," Finance Minister Grant Robertson said, when announcing the scheme yesterday. "There will be an audit process, led by IRD."
It was such criteria Goldsmith said he took issue with.
"That criteria is so loose that we have seen most businesses can collect it, including previously highly profitable professional services firms.
"At the same time, the wording is so vague - businesses must declare they are viable - that some firms genuinely needing help might be put off for fear of getting their judgements wrong."
He said more than that, there wasn't any clarity or specific details, such as how much the scheme was going to cost.
"It doesn't have the basic detail sorted out, like how many people are likely to take it, what it's likely to cost, and who it's likely to help."
He said this was a result of the scheme being accidentally legislated for on Thursday evening, which the Finance Minister said was an error by the Parliamentary Counsel Office.
At the media conference, Robertson indicated around 400,000 businesses would be eligible to seek the support.
Responding to the criticism from the opposition, Robertson said in a statement that the terms "strike a good balance".
"The small business loan scheme agreed by Cabinet meets an important need by immediately boosting cashflow.
"We are pleased that the scheme has been welcomed by small business owners and advocates."
The scheme had also been criticised by National's spokesperson for Economic Development, Todd McClay.
"Today's announcement is too little and risks being too late," he said. "It's not targeted enough and all they are doing is taking the debt that's been accumulated over the past six weeks and moving it sideways.
"The loan scheme criteria is also overly restrictive. All businesses should be viewed as viable because they have been forced to close through no fault of their own and with little time to prepare."