More than 129,000 businesses were issued loans totalling $2.4 billion with the average amount approved being $17,000.
About 10,000 loans were already in default, owing just over $161 million, the tax department said.
The SBC scheme was intended to help small and medium-sized businesses affected by the Covid-19 pandemic.
From June, Inland Revenue will default a loan if it was not paid off, and default interest of 10.88% plus a standard interest rate of 3% would be charged.
Robyn Walker, a tax partner at Deloitte, said the amount owing from the SBC loans was concerning.
“It’s definitely a problem because it all just goes into the bucket of money that the Government would like to get, which it’s not going to.”
Walker said people who owed money should probably recognise Inland Revenue was not going to go away.
“It would be timely to start looking at it and getting a process in place to get it under control.”
She said the 10.88% default interest would make a debtors’ loan balance shoot up quickly.
Walker said the wage subsidy was the country’s “first line of defence” when the pandemic arrived.
That subsidy was partly modelled on the Earthquake Support Subsidy and Earthquake Job Loss Cover, introduced after the February 2011 Christchurch earthquake.
The SBC scheme was rolled out when lawmakers recognised a lack of private sector funding available.
“It filled a need at the time. It has quite a potted history,” Walker said.
When introduced, the loans were designed to be interest-free if paid back within a year with 3% per annum charge after that.
Inland Revenue today said many SBC borrowers were sole traders or small businesses with fewer than six fulltime staff.
“The highest number of loans were taken out by businesses in Auckland, where there were longer lockdown periods.”
In March 2022, a top-up loan was introduced for existing SBC borrowers.
That top-up loan was $10,000, plus any amount the borrowers were eligible for but had not taken in their first loan.
As of December 31 last year, more than 50,000 people had repaid their loan in full, with a total loan balance of $953m still owing.
Inland Revenue’s website said for people who default: “You need to repay your entire loan immediately if you default and we demand full payment.”
It said customers behind on payments would be notified and reminded of repayment obligations.
In extreme cases, such as if somebody fraudulently applied for money, prosecutions would be considered.
