Under pressure small businesses have applied for $377 million worth of loans in the first day of applications opening.
A spokeswoman for Inland Revenue said there were 21,000 small business cashflow loan scheme applications as of 11am today and just under 17,000 had been approved and disbursed overnight with $280 million worth approved already.
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She said the difference in the figures was largely applications still to be processed when its processing closed around 6pm yesterday - the first day it was able to take applications for the loan scheme.
The average dollar amount for the loans was $18k and of those loans already approved it was $16,780.
Small businesses with up to 50 staff are able to apply for $10k plus $1800 per equivalent full-time employee up to a maximum of $100k.
That means most of those applying have around three to four staff each.
The strong take-up of the scheme stands in stark contrast to the Business Finance Guarantee Scheme which is being offered through nine banks and has 80 per cent backing from the Government.
On Friday banking industry association the New Zealand Bankers' Association revealed just 174 loans had been approved with a total of $23m lent out of a possible $6.25 billion in a period of around a month.
Finance Minister Grant Robertson announced the small business cashflow loan scheme on Friday May 1 after expressing frustration over the bank loan scheme.
He said it had "become clear that the support that was available to small and medium businesses from banks was not meeting their needs nor our expectations as a Government".
Small business representatives said the scheme conditions were too onerous and many did not meet the initial criteria.
The Business Finance Guarantee Scheme was also tweaked on May 1 with banks no longer required to obtain a general security agreement for lending over $50k and the minimum requirement of a $250k turnover dropped.
NZBA chief executive Roger Beaumont believes the loans will be more attractive once businesses have a clearer view of their longer-term prospects.
"In our view the BFGS supports longer-term lending. Businesses are more likely to be confident of applying for loans under the scheme only once they have formed a clearer view of their longer-term prospects and needs."
The IRD's small business cashflow loan scheme is interest free if the money is paid back within a year and has an annual interest rate of 3 per cent with a loan term of up to five years.
The money doesn't have to be paid back for the first two years but yesterday one expert warned borrowers to be wary of the fishhooks in the scheme.
Applications for the small business loan scheme are open for a month, although this could be extended.
Predictions are that billions could be lent to small businesses through the scheme which has the same qualifying criteria as the employer wage subsidy.
Major accounting firm Deloitte has 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, " it said in a note to clients earlier this month.
"The Minister of Finance has indicated that there are approximately 400,000 businesses in New Zealand with 50 or fewer FTEs [full-time equivalent staff]."
Meanwhile yesterday Revenue Minister Stuart Nash said 676 businesses had received more than $62m in tax refunds in the first week of the $3b loss carry-back scheme being open for applications.
"The tax refunds are a cash lifeline for businesses with non-wage fixed costs, like rent, interest and insurance. Without this support these otherwise viable SMEs may be forced to close.
"My strong advice to businesses is to talk to their accountant, bookkeeper or tax agent, or log onto the MyIR portal, to ensure they take advantage of the Government support as quickly as possible."