Bank stocks

[Snoopy]

Apologies, this article contains a link to the legislation.

"While both Finance Minister Grant Robertson and Reserve Bank Governor Adrian Orr have urged banks to lend courageously to businesses under this scheme (the Business Finance Guarantee Scheme, through which taxpayers are underwriting 80% of individual bank loans to eligible SMEs), banks will ultimately lend according to their own criteria and within their own risk appetites."

"Banks can also only lend to businesses under the scheme if those businesses have exhausted other options with their banks."

If those quotes are right, then no wonder the banks are hesitant to lend to small business. Banks are still expected to lend according to their own risk appetites (understandable). But the 'Business Finance Guarantee Scheme' will only kick in if all other finance options have been turned down. So the finance scheme can only be offered to those deals the bank has rejected. And since the bank has rejected such loans, they won't be happy with taking a 20% risk in a loan they have determined is no good. That means the 'Business Finance Guarantee Scheme' cannot work - no loan can qualify. Or have I got that wrong?

SNOOPY