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Prime Minister Jacinda Ardern says opening up Government loans for small businesses until the end of the year will provide a bigger safety net in uncertain Covid-hit times.

The loans are interest-free if repaid within a year, and firms on the original wage subsidy and with 50 or fewer staff can apply.

The scheme was meant to finish on July 24, but Ardern said at the Labour congress yesterday that it will now be available until the end of the year.

And the loan extension has been given the tick by two of the country's leading economists this morning, however they questioned the Government's plan.

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Ardern told her party faithful of around 500 yesterday that the loan extension meant businesses which were doing okay now, but who may experience cashflow difficulties further down the track, would still have access to money.

She also announced a $162m package to clean up waterways and create about 2000 green jobs in the next six years.

The loans were set up to help businesses deal with the economic fallout of Covid-19 after banks failed to fill that space in a way the Government was happy with.

The eligibility criteria will not change so there is no need to extend the $5.2 billion that has been set aside for it.

Prime Minister Jacinda Ardern addresses the party faithful at Te Papa during Sunday's Labour Party congress. Photo / Screengrab
Prime Minister Jacinda Ardern addresses the party faithful at Te Papa during Sunday's Labour Party congress. Photo / Screengrab

Small Business Minister Stuart Nash has said he did not expect take-up to come close to $5.2b because that figure is based on every eligible company applying for it.

More than 90,000 small businesses had applied for more than $1.51b in loans since May 12, mostly from firms involved in construction, accommodation, restaurants and cafes, retail trade, transport and manufacturing.

Around 80 per cent of firms who have applied have one to five employees, and just over 90 per cent have 10 or fewer staff.

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"The average value of each loan is modest, around $16,700. But it is much-needed working capital to help in a tight spot," Nash said.

Ardern told media after her congress speech that the loans were a better way to help than cash grants, which had been recommended by Treasury and previously pushed by the National Party.

"Sometimes they've drawn it down not necessarily needing it straight away, but being concerned they wouldn't be able to access it down the track.

"What this does is say that if you don't need it, you don't have to apply but it will be there for several more months."

Talking to Mike Yardley on Newstalk ZB this morning, economist Cameron Bagrie said he welcomed the loan extension.

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"What we're seeing at the moment is there is still a crash crunch going on across the economy. Technically, the economy looks a hell of a lot better than what it was 8 weeks ago as we've gone down through the alert levels but the bottom line is that for a big part of the economy we're still probably operating at 95 per cent capacity.

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"For some sectors they're probably operating at 50 to 60 per cent or even lower so that cash burn is continuing."

He said the Government had to be careful about helping the economy in the right areas and just "throwing [money] out the door", pointing out AJ Hackett bungy which last month was announced to be getting a $10 million bail out, split into $5m over 2 years.

"Some of the stuff I have seen has been really good ... but some companies where they get $5 million for a bungy operation you sort of question, what's actually going on here?"

Principal economist Peter Wilson told Yardley New Zealand was about small businesses and an area the Government had to focus on but it needed to ensure "money was well spent on targeting firms that are really facing difficulty in the international tourism sector".

Bagrie added that he would like to see the creation of a national body "that truly represents the interests of small business".

He said the bodies and chambers set up at the moment were mostly dominated by big business.

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As for the Government's "jobs, jobs, jobs" initiative, Wilson said it sounded more like a goal than a plan.

"The concern I've got, a lot of the Government's job proposals seem to be able to spend a lot of money building things out of concrete or sending people into the bush to clean up the environment but neither of those are really long term positions so I'm not sure that they're going to do more than just tie us over."

Meanwhile, National Party finance spokesman Paul Goldsmith said the extension to the loan scheme was "modest".

"I'm sure it will be welcomed, but we haven't got a commercial rent solution, which the Government has promised - but we're still waiting."

He said the announcement on green jobs was another sign of a Government that was big on promises but short on delivery.

In her speech, Ardern said she was acutely aware of how economic recoveries had left some people behind.

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"I am a child of the 80s and 90s. I have seen responses to troubled times that have failed to take this into account, and have left people behind. We see the impacts of that still. Poverty, inequality, persistent unemployment.

"It does not have to be this way, and under Labour, it won't."

Govt's Small Business Loans Scheme:

• Loans are interest free if repaid within a year.

• After one year the interest rate is 3 per cent.

• Repayments are not required for the first two years.

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• Firms employing 50 or fewer staff and who were eligible for the original wage subsidy can apply.

• The loan amount is $10,000 plus $1800 per equivalent fulltime employee, up to a maximum amount of $100,000.