Bank of New Zealand is taking a more cautious approach to business lending during the coronavirus crisis and to assessing the solvency of would-be corporate borrowers than some of the other banks.
"Our obligations to ensure we are lending responsibly don't change and it's something we take seriously," BNZ said in a written answer to BusinessDesk's question about how the bank will approach assessing whether would-be borrowers are solvent.
The government's $6.25 billion business finance guarantee scheme "provides a lot more certainty around lending at this time and we're fully supportive of it," the bank said.
"It does necessitate some changes to the way we do assessments, and we will provide a clear process online for customers to help them assess their situation.
"Customers will need to provide key details to help us work with them in their situation such as their previous earnings before interest and tax, their health before the crisis, and modelling the impact on their business and what support they will need," BNZ said.
"We are currently working constructively with the government aligned to our obligations to assess and deliver a process for customers."
Bank of New Zealand is the country's second-largest business lender after ANZ Bank with a loan book to the sector of about $27.42b. It is owned by National Australia Bank.
Kiwibank, ANZ and Westpac have all said that they intend to follow the spirit of the scheme and will assess businesses on their pre-coronavirus position and the outlook for the future once the nation's shutdown ends. ASB Bank has yet to respond to BusinessDesk's question.
The banks are waiting to be told how much of the package each will have to lend and other details.
Finance Minister Grant Robertson told the newly established epidemic response select committee today that banks will be accepting applications under the scheme this week.
Companies with annual turnover between $250,000 and $80 million will be able to borrow up to $500,000 and the principal will need to be repaid within three years.
The government has said it expects such loans to be made "at competitive, transparent rates" and it will guarantee 80 per cent of the credit risk.
That isn't the only move to boost banks' capacity to lend. The government has also said that small businesses which have used their homes as collateral for a business loan can take a six-month holiday on paying principal and interest.
Other measures include the Reserve Bank deferring the start date for new capital requirements for at least a year until July 1, 2021 which the central bank has said will allow the banks to provide an additional $47b of credit.
The central bank has also relaxed rules on how the banks fund their lending.