Budget 2020: More than $500m paid out but small business loan scheme not in Budget

Small businesses have applied to borrow more than $500 million from the Government in just four days. Photo/ File

A small business loan scheme which has already seen more than $500 million paid out from Government coffers was not in the Budget.

As of 9am Friday, more than 33,000 businesses had applied to the small business cashflow loan scheme with 31,000 loans approved.

The value of the loans applied for is just under $590m and so far $530m has been approved, according to Inland Revenue which is processing the applications.

The loan scheme, which is interest-free if paid back in the first year, opened to applications on Tuesday after being announced on May 1 by Finance Minister Grant Robertson.

Robertson said today Inland Revenue had seen 10 applications per minute in the first few days, although that had since dropped back to six per minute.

"We have a very large number of people taking up that scheme."

Major accounting firm Deloitte has estimated the cost of the scheme could run into the billions of dollars.

In a note released earlier this month, it said that if all 213,599 self-employed people who had received the employer wage subsidy applied for the scheme it would be the equivalent of $2.5 billion.

On top of that would be businesses who employ others.

"A further 213,239 employers have applied for and received the wage subsidy, of which a large number would be eligible for a loan.

There are about 400,000 businesses in New Zealand with 50 or fewer full-time equivalent staff.

But don't expect to see any numbers for the cost of that scheme in the Budget.

When asked where the Budget figures were for the cost of the scheme, a Treasury spokesman pointed to a statement on its website.

The statement said while there was usually a moratorium in place on Government financial decisions from the time Cabinet made Budget decisions until Budget day the swiftly evolving health-related and economic impact of Covid-19 had meant the Government continually needed to make decisions to respond to the crisis.

"As a result, the Budget documents released today do not capture all Government decisions that have been made by Budget Day."

The cut-off for spending decisions to be included in the Budget was April 6, and an April 20 cut-off for the fiscal strategy.

The Treasury statement said given its forecasts incorporated the full amount of funding made available by the Government, the individual decisions taken since the finalisation of the forecasts did not significantly alter its overall view of the economic and fiscal outlook.

"However, due to the type of spending and phasing of the individual decisions, there is likely to be some minor impact on individual indicators presented in the 2020 Budget Economic and Fiscal Update."