Almost seven in 10 SMEs have used their personal finances for business purposes. Photo / Getty Images
Almost seven in 10 SMEs have used their personal finances for business purposes. Photo / Getty Images
A new survey suggests it is getting even harder for small and medium-sized businesses to access working capital in a post-Covid environment.
Research by YouGov, commissioned by small business lending specialist Prospa, has found that six in every 10 New Zealand SMEs (57 per cent) say accessing funding for their business from banks is becoming tougher.
For businesses that have operated less than five years, that figure was much higher.
The survey found that increasingly small business owners have 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) have missed out on business opportunities due to funding difficulties, the survey found.
Adrienne Church, Prospa New Zealand general manager, said the survey 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 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," 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."
Adrienne Church. Photo / Supplied
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 that:
• 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;
• 21 per cent have drawn down on a mortgage to finance their business.
While on the accessing finance front, finding are discouraging, the survey found that businesses are upbeat about their prospects ahead.
Silver lining to pandemic
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."
