New Prospa data reveals where and why Kiwi small businesses are lending

Demand for small business finance continues to grow, as Prospahighlights key industries and regions that financial advisers and brokers can target to diversify their portfolios.

Saturday, May 10th 2025, 10:55AM

The top three regions applying for funding were Auckland (3,077 applications), Canterbury with (787 applications) and Waikato (680 applications) .

Adrienne Begbie, managing director, Prospa New Zealand, says the findings point to a significant opportunity for advisers to broaden their service offering by supporting business clients who may already exist in their mortgage or insurance books.

“Small businesses account for 97% of all businesses in the country. Kiwi entrepreneurs are everywhere, and they might already be clients without you even knowing it. By getting to know your existing clients, and their individual circumstances, savvy advisers can diversify into SME lending.

“Our data showed that the top four industries for applications and originations were Building and Trade, Professional Services, Hospitality, and Retail. Fostering relationships with SME owners, particularly in these key industries, can lead to surprising business opportunities,“ says Begbie.

Most common reasons for SME funding
Prospa’s recent use of funds data shows that across nearly every sector, working capital continues to be the most common reason for SMEs seeking funding, accounting for over 40% of funding requests nationwide.

“While working capital is the number one reason SMEs are seeking funding, it’s encouraging to see that over 10% of entrepreneurs are directing funds toward growth and expansion, indicating confidence despite the current economic challenges,” Begbie says.

Prospa’s nationwide use of funds data for SMEs

Working Capital - 42%
Expansion/Growth - 11%
Purchasing Inventory - 9%
Buying Equipment - 7%
Pay Suppliers - 7%

Sector-specific insights
The use of business funding varies significantly across industries, with each sector facing its own unique set of business challenges. By understanding these specific trends, advisers can offer more targeted advice and uncover new opportunities within their existing client base.

Prospa’s use of funds data by sector.

Building and Trade

Working Capital - 50%
Pay Suppliers - 11%
Expansion/Growth - 9%
Buying Equipment - 6%
Purchasing Inventory - 4% Professional Services
Working Capital - 53%
Expansion/Growth - 11%
Buying Equipment - 6%
Expansion/Growth - 4%
Remodelling/Expansion - 4%

Hospitality

Working Capital - 33%
Expansion/Growth - 13%
Remodelling/Expansion - 9%
Renovation - 6%
Buying Equipment - 11% Retail
Purchasing Inventory - 31%
Working Capital - 22%
Expansion/Growth - 8%
Purchasing inventory - 6%
Pay Suppliers - 8%

Begbie notes that while demand for funding is strong, over a third (35%) of SMEs are still unaware of alternative lending options outside of the major banks.

“There’s a real opportunity here. Advisers who proactively engage with their small business clients and understand their funding needs can deliver more comprehensive financial advice, building stronger relationships in the process. If you’re not asking the question, someone else will.”

Tags: Business lending