The almost $12 million doled out to the privately run Green School in Taranaki was always intended to be mostly loans, its chief executive Chris Edwards says.
Edwards said the school applied for funding for an expansion project in good faith and was struggling with the backlash.
In the wake of the revelation, Green Party co-leader James Shaw apologised on Tuesday for backing the $11.7m grant, saying it "was an error of judgment".
"It was for a shovel-ready infrastructure project. We also ticked the green box and ticked the box that said that the consequence of the investment would be an injection into the economy which in our case was a sizeable one," Edwards said.
"I can't really answer that question, not because I'm dodging it, but because I'm not responsible for that application. But I do know that there are conversations going on now to see if we can use the funds in as creative a manner as possible so that they will benefit the community."
Edwards could not say whether the school's owners would be willing to give the money back.
He said the Green School had become a political football.
"People were congratulating us only a few days ago who are now saying it's outrageous and should never had happened, and it's a very unedifying spectacle to watch."
Edwards said it was undeniable that the Green School's image had been tarnished.
"The Green School has been misrepresented, there's no doubt abut that, so there's no point in pretending everything this week has been normal as much of it is genuinely out of our control and is in the hands of politicians."
He said he'd never experienced anything like it.
"I've been in education 30 years and I suddenly find myself in this binary conversation where it would appear to some people that we are almost taking money from the public sector. That cuts deep into me and they're not crocodile tears.
"I've never ever been in a situation like this. I stand all square behind the public sector over leaky classrooms or whatever it is that is required to make the sector strong and robust."
Edwards also found himself distancing the school from parents of students there who have publicly expressed Covid-19 conspiracy theories and held something called a "lion's gate abundance and manifestation ceremony" on its grounds.
Christof Melchizedek, who describes himself on his website as a "navigator, architect and guardian" in the service of the "Devine Plan" has been reported as saying in a now-deleted Facebook post that Covid-19 was a "manufactured natural disaster" and a "UN 2030 vision".
Melchizedek and his partner Alaya had also planned to plant a sacred crystal grid on school property with students.
Edwards said he would would not comment on any individual parent or student.
He said many different groups used the campus but that did not necessarily mean the school endorsed their views.
"I think any individual who makes comments that are not necessarily in line with the school is entitled to make them, but the point I have to make most stridently is that it is not reflective of the view of the school itself.
"So when we teach health we would follow New Zealand Ministry of Health guidelines etc just as any school would and if any individual holds a different view and they express that view, fine, but it is not reflective of the school."