Tonga's Prime Minister, Dr Feleti Sevele says businesses will still have to pay interest if they apply for a loan through the new Private Sector Reconstruction Facility.
The Facility was set up with a more than seven million US dollar grant from New Zealand and Australia to provide low cost rebuilding loans to those businesses directly affected by last year's November riots.
Dr Sevele says the grants have also made it possible for the banks to drop the local lending rate of 13-percent down to five percent.
"The bank will borrow from the fund at no interest rate, but the borrowers will repay to the bank and then the bank will repay to government, therefore the bank has to take charge an interest for it's risk."
Dr Feleti Sevele, the prime minister of Tonga.