Businesses need valid proposal

The National National

By DALE LUMA
BUSINESSES need to have a valid business proposal to have access to the K2 billion support raised under government bonds issued in the Covid-19 rescue package.
According to Bank South Pacific (BSP) chief executive officer Robin Fleming, the money would be made available pending an NEC (National Executive Council) decision.
Fleming said the bonds were a credit enhancement scheme which would have the same standards that any commercial bank had.
“We have had discussions with Department of Commerce and Industry and Treasury,” he said yesterday.
“We are told that there was an NEC decision that was required to put into place of the arrangements we have agreed with the various departments now that the bond is successful.
“We have K2 billion in funds raised under the Covid bonds (government bonds), we’d like to think that they will be available soon.
“At the moment, we are waiting on the treasury and commerce departments to respond to our negotiations.
“They appear to be positive, in particular the Department of Commerce and Industry, to make it as painless for people to have access but needing also to recognise that it’s a credit enhancement scheme.
“The underwriting stands will be the same that BSP or any other commercial bank would have that it’s the moral risks associated with having a government guarantee which doesn’t interfere with a normal credit approval process.
“The last thing the Government, the Department of Commerce and Industry or BSP would want to see is the people taking out loans under this support package and all of a sudden going into default.
“It is important we have an underwriting standard which is fully recognised, that we have customers fully aware that it’s an enhancement.
“The first priority for repayment has to be on the underlying viability of their business, government will be able to form some kind of guarantee.
“If you can’t succeed, you still have to have a valid business proposal to any bank to ensure that you can repay on first call from your own business operations.”