Advisers well positioned to fill SME lending gap left by banks
Small businesses struggling to access capital as bank lending slows.
Saturday, June 21st 2025, 2:49AM
Small businesses are finding it tougher to get bank loans, leaving some struggling to manage their cash flow.
According to Reserve Bank data, the compound annual growth rate of bank lending to businesses has slowed from 6% in 2013 to just 1.5% today. Business lending from ANZ has declined, while Westpac’s SME lending has remained flat since 2020. With banks increasingly favouring capital-efficient home loans over commercial credit, many small business owners are left with fewer funding options.
Despite this, small businesses aren't losing hope. In fact, the latest research paints a picture of resilience and renewed ambition. Prospa’s SME Sentiment Tracker revealed 63% of Kiwi small business owners feel optimistic about their growth over the next 12 months, and 57% rate their current business health as “good” or “very good.”
The latest 2degrees’ Shaping Business study, reported New Zealand’s highest level of business optimism since 2021 with 45% of business leaders more upbeat about this year compared to last and 65% expecting revenue growth in the year ahead.
However, this optimism exists alongside real financial pressure, particularly when it comes to managing cashflow. Prospa’s SME Sentiment Tracker found that 59% of small businesses have just three months or less in cash reserves, and nearly a quarter have less than a month’s reserves.
Adrienne Begbie, managing director at Prospa New Zealand, says the shift away from SME lending by banks is not a short-term trend, and advisers have a vital role to play in addressing the funding gap.
“Kiwi small businesses are feeling positive and productivity is improving, but access to capital remains a major roadblock,” she says. “The retreat from SME lending by major banks is not new and it’s not temporary, so there’s a real opportunity for advisers and alternative lenders to step in and support this vital part of the economy.”
More and more small business owners are turning to advisers to help them get the funding they need. In New Zealand, more than 55% of Prospa customers now come via advisers. The trend is even more established across the Tasman, where mortgage brokers command more than 76% of market share, with seven out of 10 borrowers choosing to work with a broker or adviser.
“There’s still plenty of room for growth here,” says Begbie. “As traditional funding options become harder to access, small business owners need someone they can trust to help them understand their options. Without that support, it can hold them back from growing or running their business at full speed.”
As bank business lending slows and with small business confidence on the rise, advisers have a timely opportunity to step up, grow their client base, and play a central role in helping local small businesses thrive.
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