More than a third of SMEs seek extra financing

More than a third of small to medium-sized businesses sought additional funding in the year to last August, Statistics New Zealand data shows.

Its provisional business finance survey found that 90 per cent of requests for finance resulted in either some or all of the amount sought being received.

The survey showed that 36 per cent of business with between one and 500 employees sought some kind of finance over the year.

This included 34 per cent seeking debt finance and 6 per cent seeking equity finance - including an overlap of 4 per cent who sought both.

Debt finance included any finance that businesses must repay, such as overdrafts, credit cards and convertible debt. Banks provided 72 per cent of the debt finance, while finance companies provided 26 per cent.

Equity finance included additional financing from existing owners of the business and any finance received in exchange for a share in the ownership of the business.

The main source of equity finance were individuals who controlled a business (83 per cent) and their friends and family (11 per cent). Other sources included employees, parent companies, venture capital or private equity funds and other businesses.

The survey found that businesses had outstanding debt of $36.1 billion at the end of the last financial year, against $30.6 billion in equity.

The survey, the first done here, was developed by Statistics NZ with the Ministry of Economic Development. A full report of the survey will be published in June.

- NZPA