SMEs need grants rather than government loans – Kiwibank boss

The government should consider direct subsidies to businesses affected by the pandemic rather than loan programs, the Kiwibank chief said.

Kiwibank Managing Director Steve Jurkovich.
Photo: Kiwibank

Steve Jurkovich told a trans-Tasman business seminar that the government’s and Reserve Bank’s initial response to Covid-19 was necessarily strong and welcome.

He said there had been only a lukewarm response to the low-interest government-guaranteed commercial loans available through retail banks as the process and conditions for applying were too complicated.

“I would love to see a more direct stimulus for small businesses … more in that direction.”

He said most of the business support was provided through loans, which businesses did not want to participate in.

“There is nothing safer if a customer lacks self-confidence, they don’t want to borrow, and I think trust is the most scarce commodity right now.”

Jurkovich said economic recovery will come through hiring and investing small businesses, as well as helping those who have lost their jobs.

“I think we in New Zealand are going to have a much bigger and bigger government and I think that’s necessary because the stimulus and the way things are to be supported have changed dramatically.”

However, he said the recovery was likely to be patchy, such as tourism where region-oriented operations would do better than those dependent on foreign tourists, and high-end, paying establishments struggling because locals don were unwilling to spend that much.

Jurkovich said large companies could help small businesses by paying their bills on time and setting an example in ensuring that supplies pay their staff a living wage.

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