Small businesses struggle
A new survey reports small and medium sized businesses are finding it increasingly difficult to get financing from traditional lending sources.
Tuesday, February 9th 2021, 8:31AM
Nearly six in 10 SME business owners in New Zealand say it's getting harder to access funding from banks and other traditional sources, according to a new study from YouGov, commissioned by SME lender Prospa.
More than half, or 55% of business owners said they have lost out on growth opportunities as they could not access financing.
While 69% of business owners said they were forced to tap into personal funds or family finances.
Millennial small business owners (72%) were more likely than their baby boomer counterparts (46%) to say that they have missed out on business opportunities due to funding difficulties, according to the study.
Since the pandemic, mortgage advisers report that banks have tightened up on business financing, making lending decisions based on financial performance during the pandemic.
Last year, advisers say major banks routinely asked business owners to provide two-year projections using data from the six months after March.
The YouGov/Prospa survey also found that 44% of businesses believe there is too much red tape in the business lending process. A total of 37% said they couldn't or didn't want to provide asset security.
Prospa's Adrienne Church said advisers have a role to play in helping businesses secure much-needed financing. She called on the industry to consider non-bank sources in the year ahead.
"Many small businesses still don’t realise they have viable alternatives to banks and traditional lenders, and as a result they are missing out on opportunities to grow and invest in their own success," Church said.
"This is where advisers need to be talking to their clients and helping them navigate their options, especially as many businesses are making plans for the year ahead and considering investing in their business."
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