Canterbury's quake-hit small businesses face cashflow "crisis"; Govt set to give assistance

Canterbury's small businesses face an unprecedented cashflow crisis as shops remain shuttered and workers unpaid after three days of earthquake disruption, the Canterbury Chamber of Commerce has warned.

"We're dealing with an unprecedented crisis," chamber Chief Executive Peter Townsend told interest.co.nz.

Meanwhile, the government is gearing up to provide some assistance to both small businesses and their workers.

Prime Minister John Key told reporters at parliament he hoped to unveil subsidised work programmes later on Tuesday to help employees who had not been paid by small businesses, the NZHerald reported.

Mr Key said he was concerned about employees of small businesses who would no longer be getting wages because their places of work had been destroyed.

"The waitress working at one of the bars in Christchurch which has closed as a result of the earthquake through no fault of her own, can't go to work, and has to meet her obligations, well it's a little unfair if she can't be paid." It would be temporary payment but details had yet to be fleshed out, Key said.

Social Welfare Minister Paula Bennett later announced a NZ$15 million wages fund. The government will pay employers with up to 20 staff up to NZ$350 a week for four weeks where earthquake damage means they cannot operate.

It would be paid in advance direct to employers and be backdated to the earthquake, she said.

Firms holding insurance cover for loss of earnings would be expected to use this before accessing the wage subsidy, she said.

"We're very aware small businesses have been hit hard by this crisis and we are determined to help them get through the worst of it."

Businesses can apply from this Thursday and would be paid within 24 hours.

Employers should call the Government earthquake helpline 0800 779997, she said.

Here are more details of the wages fund and how it can be used.

The Canterbury Chamber of Commerce said any government support for small businesses not covered by business interruption insurance did not create a precedent.

'Moral hazard?'

"If support isn't given it will have big consequences. We have to be pragmatic," Townsed said.

Townsend said he had "no idea" how many businesses do not have insurance, but said calls from concerned businesses were coming in "by the second".

He said if businesses were allowed to go under, Christchurch's economy would suffer in the long term.

The chamber is working with businesses on three key issues: cash flow, access to buildings, and employee relations, Townsend said.

Finance Minister Bill English has called on banks and the IRD to show flexibility in dealings with affected businesses.

The big four banks have donated NZ$3.5 million to relief funds, and will waive mortgage payments and late credit card payments for affected customers.

Smaller banks such as Southland Building Society (SBS) are granting discretion to managers to take similar steps.

See more information on the banks' responses here.

Townsend said he spoke with two major banks this morning, to reinforce the need for support.

He said some businesses would not recover from the earthquake, but "there will be a lot that will, to put a positive spin on it."