Capital hard to find for smaller NZ businesses
But despite lockdowns, many feeling more in touch with their customer base – survey
Anew survey suggests it is getting even harder for small and medium-sized businesses to access working capital post-Covid. Research by YouGov, commissioned by small business lending specialist Prospa, has found 57 per cent of Kiwi SMEs say accessing funding for their business from banks is becoming tougher.
The figure was considerably higher for businesses that have operated less than five years.
The survey found small business owners have increasingly had to use their personal or family finances for business purposes.
Of those that have tried to access funding, more than half of small business owners said they have missed out on opportunities to grow their business because they could not access funding when they needed it.
Millennial small business owners (72 per cent) were more likely than their baby boomer counterparts (46 per cent) to have missed out on business opportunities due to funding difficulties, the survey found.
Prospa’s New Zealand general manager Adrienne Church said the findings shone a spotlight on one of the biggest barriers to growth for small businesses.
“Small businesses need funding to move forward, whether that’s hiring new employees, buying new equipment, or rolling out new goods and services. When businesses cannot access the capital they need, when they need, they can remain in a state of limbo, and in some cases, even go backwards. Or they can fall into the traps of blurring business and personal finances, which can add additional emotional stress,” Church said.
“It has always been difficult for small business owners to access funding but I think it is getting harder as time goes on, especially coming out of Covid.” Church said improving small businesses access to finance was absolutely critical to getting the New Zealand economy back on track in 2021.
Other findings revealed:
● Almost seven in 10 (69 per cent) SMEs have used personal finances for business purposes. Of which, almost two in three (65 per cent) have tapped
into personal savings and nearly four in 10 (39 per cent) have used personal credit cards
● Just under one in four (24 per cent) SMEs have borrowed from family and friends and;
● Twenty-one per cent have drawn down on a mortgage to finance their business.
While the findings on accessing finance were discouraging, the survey found businesses are upbeat about their prospects ahead.
Despite the nationwide and
Auckland-wide lockdowns last year, 53 per cent of small business owners reported feeling “more connected to their community and customers as a business”, more so now than they did before the pandemic.
Church said support-local campaigns and the public wanting to get behind their local firms had proven to be beneficial for SMEs as they got back on their feet.
A large portion of SMEs were in growth mode, and many were trading better than they were pre-Covid, she
said. “Given the periods of isolation and some challenging times during the peak, it’s been great to see this positive finding in the survey.
“I think New Zealanders have, more than ever, been able to appreciate the role small businesses play in their day to day life, the personality they bring to the neighbourhoods, the jobs they create, and in turn, small businesses are feeling that connection with their communities too.
“That’s a real positive outcome that I hope continues.”