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Access to finance biggest pain-point for SME growth

Research commissioned by small business lending specialist Prospa has revealed that the majority (57 percent) of SME owners in New Zealand say it is getting harder to access funding from the banks and traditional lenders.

Of those that have tried to access funding, more than 55 percent of small business owners have missed out on opportunities to grow their business because they were unable to access funding when they needed it.

Prospa general manager, Adrienne Church says SMEs need funding to be able to move forward, whether its for hiring new employees, buying new equipment, or rolling out new goods or services.

“When businesses can’t 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.”

Adrienne Church, Prospa general manager

Beyond this, the survey found that 69 percent of small businesses have used personal finances for business purposes. Out of this statistic, almost two in three (65 percent) have tapped into personal savings and nearly four in ten (39 percent) have used personal credit cards. 24 percent of SME owners have borrowed from family and friends and 21 percent have drawn down on a mortgage.

When asked why it is getting harder to access funding from the banks and traditional lenders, 44 percent of respondents said too much red tape and that the process was too long, 41 percent said the products offered weren’t suited to their needs, and 37 percent said they either couldn’t or didn’t want to provide asset security, such as a family home, upfront.

“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,” says Church.

“Non-bank lenders like Prospa are designed to solve these small business pain points. We use data-driven technology to assess risk, can provide a response and funding within 24 hours, and don’t require asset security upfront to access funding.”

Church adds that small businesses have enough on their plate and improving access to finance will be critical to getting the economy back on track in 2021.

Review overview