The New Zealand prime minister, Helen Clark, says the first steps have been taken towards helping Tonga to rebuild its capital, Nuku'alofa, following last year's riots.
Miss Clark has held bi-lateral talks with Tonga's prime minister, Dr Feleti Sevele, in Auckland.
Miss Clark says 10 million NZ dollars has already been promised which will come from the NZAid and be used for the business recovery facility.
"It will be administered through Commercial Banks and will provide for eligible businesses to be able to get subsidised loan or loan underwriter guarantee, and that's part of getting the private sector going again in Tonga."
The talks between the two leaders also cover political reform of Tonga's constitutional monarchy, with New Zealand wanting to see Tonga move towards more democracy.