ZB

Budget 2022: $100 million earmarked for small business

Author
NZ Herald,
Publish Date
Thu, 19 May 2022, 3:52pm
(Photo / Getty Images)
(Photo / Getty Images)

Budget 2022: $100 million earmarked for small business

Author
NZ Herald,
Publish Date
Thu, 19 May 2022, 3:52pm

The Government has earmarked $100 million in the Budget for a Business Growth Fund aimed at improving access to finance and enabling small business to grow. 

It has plans to team up with retail banks to create a new fund that will invest in small and medium-sized enterprises, with the Crown holding a minority shareholding in the fund. 

The government says the fund will be "privately operated" and "independently managed". 

Minister for Small Business Stuart Nash said the Government had discussed the proposal with the Reserve Bank, which would consult on it publicly. 

"Business Growth Funds have more modest return expectations and no hard exit deadlines allowing business owners to set their own growth targets and identify the most appropriate time and path to exit," Nash said. 

"Banks that own the fund could refer SMEs to it where equity finance would be more appropriate than debt finance. 

"The fund would be an active investor focused on providing growth capital, and wrap-around capability support," Nash said. 

"The fund would always be a minority investor with a seat on the board, offering guidance and expertise, but always leaving owners in control." 

Jo Tozer, spokeswoman for small business accounting firm MYOB, said accessing capital was a key challenge for many small firms, so the announcement would be welcomed by many. 

She said the Business Growth Fund would provide good long-term help - but did little to help in the short term. 

However, 48 per cent of SMEs in MYOB's 2022 Business Monitor stated that access to finance will be a pressure point on their business this year. 

Business lobby group BusinessNZ and campaign Buy NZ Made welcomed the money. 

Buy NZ Made executive director Dane Ambler said many small businesses were "teetering on the edge" and were in desperate need of more financial support. 

"Small businesses have shown resilience to get through the past 12 months, despite a perfect storm of Covid in the community, staff shortages, a closed border and shipping costs and delays. 

"With the threat of a looming recession, inflation and ongoing shipping issues, we need to continue to help local businesses get back on their feet and thrive," Ambler said. 

"The flow-through of Covid is only just reaching some businesses. We needed decent support for Kiwi companies from today's Budget, and we look forward to seeing how businesses can benefit from the fund in the next 12 months." 

BusinessNZ chief executive Kirk Hope said business was looking for ways to shore up skill shortages, reduce business tax and costs, and more scrutiny of employment changes. 

He said the group would have liked to have seen more investment in infrastructure, lower corporate taxes and a path for getting inflation under control. 

"$60 million to boost broadband will benefit remote business. And it's good to see Government thinking about helping industry transform for the future. 

"But as always, the quality of these initiatives will be crucial. 

"Likewise, $100 million for small business is excellent, but it all depends on the how." 

- by Aimee Shaw, NZ Herald