Latest / Best of Business / Chris Small: ABC Business Sales managing director on businesses reaching the cut-off point to pay back Covid loans

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Chris Small: ABC Business Sales managing director on businesses reaching the cut-off point to pay back Covid loans · Best of Business

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  Speaker 2: Now, speaking of businesses, do you remember those small business
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  Speaker 2: loans that Grant and just Sinder handed out at the
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  Speaker 2: height of the pandemic in twenty twenty. Well, they were
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  Speaker 2: all supposed to be paid back within five years, which
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  Speaker 2: means they're coming up do you write about now? But
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  Speaker 2: there's still about nine hundred million outstanding. Chris Small is
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  Speaker 2: managing director at ABC Business Sales and with US.
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  Speaker 3: Now, Hey, Chris, hey, here here you going.
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  Speaker 2: I'm very well. Thank you. Now, if nine hundred million
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  Speaker 2: is still paid back, and it was also is still outstanding,
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  Speaker 2: and it was all supposed to be paid back within
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  Speaker 2: five years, I would say a lot of that is
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  Speaker 2: not coming in.
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  Speaker 3: Is it your spot on? Yeah, it's very unlikely. And
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  Speaker 3: given the security position that the government title was actually
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  Speaker 3: an unsecured loan, so they're not walking on particularly strong
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  Speaker 3: footing when it comes to trying to receive it either.
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  Speaker 2: Okay, so what's gone on here? Have the businesses folded?
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  Speaker 2: Have they just decided they're not going to pay it back?
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  Speaker 3: What? Well, when you think about it. When it was
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  Speaker 3: first off that it was interest free for a year,
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  Speaker 3: and then it moved to three percent after that for
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  Speaker 3: the next four years. Generally an unsecured business loan would
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  Speaker 3: be anywhere from sort of goodness eight to twelve percent,
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  Speaker 3: So of course everyone was going to take it if
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  Speaker 3: you're a sensible business person. And then I suspect that
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  Speaker 3: they've just really put their heads in the sand and
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  Speaker 3: just pretend it's not there, because you know, three percent,
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  Speaker 3: there's not a lot to be paying back on an
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  Speaker 3: interest only basis. And there's probably also a few of
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  Speaker 3: them that are probably not no longer around because a
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  Speaker 3: high proportion of these businesses were sold traders, and businesses
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  Speaker 3: were fewer than six full time staff.
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  Speaker 2: It's not as if we've left things for five years,
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  Speaker 2: is it. It's not like we said here's your money in
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  Speaker 2: twenty twenty and then we're going to leave it. There
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  Speaker 2: has been some contact with these people, hasn't there?
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  Speaker 3: Yes? But minimal I think, you know, really they put
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  Speaker 3: the government put there, especially the previous don't put their
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  Speaker 3: head in the sand through this money.
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  Speaker 2: Possible, Chris, If there's been minimal contact, is it possible
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  Speaker 2: that some of these people just forgot and all of
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  Speaker 2: a sudden, oh jeez, yeah, I've got to pay the
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  Speaker 2: money here.
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  Speaker 3: It is I suspect will strive to suspect that it's
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  Speaker 3: a very small proportion. I suspect they will struggle to
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  Speaker 3: get the majority of this money back because either a
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  Speaker 3: they can't afford it. Be what you remember as a
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  Speaker 3: business owner is more than like you're going to have
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  Speaker 3: a home loan mortgage, so that'll take priority because if
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  Speaker 3: he doesn't pay that, the bank will come in and
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  Speaker 3: take his house. The government doesn't have the ability to
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  Speaker 3: do that. They don't have a personal guarantee, they don't
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  Speaker 3: have a mortgage on his business or his house. So
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  Speaker 3: they're going to be a lot lower in the pecking
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  Speaker 3: order when it comes to who a business owner decides
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  Speaker 3: to pay back. And that's if they're still around.
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  Speaker 2: I mean, I can't believe that I'm actually saying this,
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  Speaker 2: But we've learned a lesson, haven't we? As if we
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  Speaker 2: did as if we learned needed to learn this lesson.
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  Speaker 2: We have learned a lesson here.
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  Speaker 3: Yeah, we've learned the hard way. That's nine hundred million
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  Speaker 3: that potentially could go towards hospitals, education, lots of other
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  Speaker 3: good stuff, but in the end, we we basically gave
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  Speaker 3: it away.
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  Speaker 2: I mean, Chris, this is one oh one about lending money.
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  Speaker 2: You make sure it's secured, you know, you lend it reasonable.
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  Speaker 2: So this is this has got to be one of
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  Speaker 2: the dumbest things that you've seen happen.
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  Speaker 3: Surely well absolutely, I mean, who wouldn't take the money
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  Speaker 3: interest free for the first year and then moves to
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  Speaker 3: three percent and it's unsecured. I mean I would have.
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  Speaker 3: We didn't take any because we were I guess we've
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  Speaker 3: got to act with ethics and integrity, but I think
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  Speaker 3: a lot of New Zealanders would have taken that and
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  Speaker 3: who knows what A what they did with the money,
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  Speaker 3: and b who knows where they are now.
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  Speaker 2: Yeah, pretty remarkable, Chris, Thank you very much, Really appreciated.
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  Speaker 2: Chris small, Managing Director, ABC Business Sales.
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