Prime Minister Jacinda Ardern announced at the start of the week there would not be a third wage subsidy scheme for businesses with slashed revenues due to Covid-19.
That means the extended wage subsidy will start ending three weeks before the September general election.
"The wage subsidy scheme has been a life-saver for many businesses," Otago Southland Employers Association chief executive Virginia Nicholls said.
It helped businesses retain staff and keep operating in the foreseeable future while also assisting with cashflow, she said.
"Most businesses realise that the wage subsidy is not able to carry on for an extended period of time."
Mrs Nicholls was concerned the election would slow business activity just as the extended wage subsidy was winding up.
"We are expecting to see another round of restructures and redundancy at the end of the extended wage subsidy."
Targeted support was needed for viable businesses with short-term cashflow problems, she said.
"It has taken time to build their skilled workforce, and some are facing a timing issue, particularly relating to the shovel-ready projects.
"We would like to see some targeted assistance for some harder-hit industries that have not yet been able to see the shape of demand in the Covid economy."
Small businesses welcomed the extension of one-off loans through to the end of the year and they were keen to see a strategy for reopening the borders in a safe manner.
