Take-up of the $6.25 billion government-backed Business Finance Guarantee Scheme has been slow so far, initial figures from the banking industry show.
Just 174 loans have been approved across nine banks with a total of $23 million lent out according to the New Zealand Bankers' Association.
But 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."
Beaumont said moving into level 3 had made that more possible for some businesses.
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Businesses had also been able to tap into the employer wage subsidy which had cushioned the effects of Covid-19 for some, he said.
"Because it was paid upfront the wage subsidy has meant that many businesses have not yet had the need to look for other assistance.
"Many businesses needing a loan so far have, for example, opted to quickly roll over short-term funding or extend overdrafts already in place with their bank."
Outside of the BFGS banks have lent $7.2b to businesses since the lockdown began on March 26.
The slow up-take of the scheme has already attracted criticism from the Government.
Last Friday Finance Minister Grant Robertson 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."
That prompted the Government to launch a small business cashflow loan scheme which will see loans of up to $100k made available to businesses with up to 50 employees directly from the Government via Inland Revenue.
The loans are interest-free if paid back in the first year and have a 3 per cent interest rate after that with the loans due to be paid back within five years.
It also tweaked the BFGS dropping the minimum requirement for businesses to have a turnover of at least $250k and a general security agreement.
Beaumont said it welcomed Treasury simplifying the scheme last week.
"We hope this means more customers are able to participate in the scheme for their longer term needs."
But he said banks were responsible lenders and the scheme, which is 80 per cent government backed, did not change that.
"Businesses borrowing under the scheme still need to see a way of repaying the loan. The new Inland Revenue loans, which are interest-free up to a year, may be a better option for some with immediate needs."
Banks have been reluctant to give out individual figures on how many loans they have approved.
Westpac said it had approved 52 loans totalling $6.7m.
A Westpac New Zealand spokesman said it had received more than 740 expressions of interest for lending through the Business Finance Guarantee Scheme.
"We are still working through most of these, as it can take some time for a business to pull together a full application."
BNZ said it had so far lent over $5m to 33 customers.
"Each application takes time to assess and we're having open and honest conversations with customers about their situation and their plans," a spokesman for the bank said.
"We are being flexible and sensible with a focus on making good lending decisions to support businesses. This means making sure that more lending and debt is the right thing for that business because there might be other options that better suit their needs."
He said the scheme was just one option of many that the BNZ was offering business to help them withstand the impacts of Covid-19.
"We're seeing many businesses opting to go for short-term measures like extending their existing overdrafts, while they consider whether longer-term solutions like the BFGS suit their purposes."
A spokeswoman for Kiwibank said it had 190 formal applications and so far 32 loans had been approved totalling just over $4.88m.
Kiwibank chief economist Jarrod Kerr said he saw the low uptake as a positive sign.
"Businesses have come to banks saying we are hurting and would like to know about the debt facility, we've told them about it, and they've decided not to take it up, yet.
"It is a good thing not to lump extra debt on companies when they don't need it. It is there as a backstop and if we have to change levels and go backwards that is when companies will need to utilise the facility. It is good it's there as a backstop."
ANZ had approved 25 loans lending $5.3 million.
An ANZ spokeswoman said many businesses were still working out their ability to operate under various Covid restrictions and what recovery/rebuild support they might need.
"Many are looking at what options, other than borrowing, are available."
The scheme is open for applications until September 30.