Insights from the New Zealand SME Banking Council

The latest research for the New Zealand SME Banking Council provides a pulse check for how Kiwi small businesses are feeling.

At a glance

  • When dealing with cash flow, the biggest challenge facing SMEs is uncertainty of profits when trying to plan.
  • Kiwi SMEs have become more concerned about accessing the funds their business requires.
  • Small business owners’ awareness of and comfort levels with alternative lenders is the highest in years.

The past 12 months have been a turbulent time for Kiwi small businesses, from mitigating the ongoing impacts of COVID-19 to talk of a looming recession, a cloud of uncertainty has been in the air for many SME owners.

The study, conducted by RFI Group and commissioned by Prospa, delves into the challenges facing SMEs and the rise of alternative lenders in the New Zealand financial services landscape.

Top challenges facing SMEs

As at November 2022, economic and regulatory factors such as the rising cost of goods, increasing interest rates and uncertainty with government regulations was the number one challenge, affecting 23% of SMEs. Staffing (21%) including high turnover and lack of experienced staff or not enough staff, business demand and cashflow (15%) and financing growth (14%) were the other key challenges facing Kiwi SMEs.

Access to funding

When dealing with their cash flow, 25% of SMEs said their biggest challenge was uncertainty of future profit when planning for the future. 55% of SMEs have become more concerned about accessing the funds their business requires – an increase from 48% in May 2022.

In addition, there has been an increase in both loan amounts applied for and loan amounts required over the last six months. However, despite an ever-increasing demand for loans, more SMEs than ever have been unable to access the funds required, with 1 in 5 either being declined funding or only receiving a portion of the loan they applied for (a significant increase since May 2022).

Due to the likelihood of being declined for funding, over 8 in 10 SMEs that are less likely to seek financing and have also become more concerned about accessing the funds their business requires.

Rise of alternative lenders

With traditional funding becoming less accessible to small businesses, many are looking to alternative lenders, with awareness of, and comfort with, alternative lenders the highest it’s been in years.

Between May 2019 and November 2022, awareness of alternative business lenders increased from 61% to 75%. Between September 2018 and November 2022, SMEs also increased their comfort level with taking out a business loan from alternative lenders from 7% to 23%.

The top drivers for using an alternative lender were lower fees, faster access to funds and greater flexibility.

Prospa is the financial services partner of choice for Kiwi small businesses, offering simple, stress free and seamless financial management to unleash the potential of every small business. To find out more about Prospa, visit

Media Contact:

Magenta Boyd
One Plus One Communications
Account Director
E [email protected]
T +64 21 2777 522

About the Research
The study was conducted by RFI Group and commissioned by Prospa, with a sample of 518 SME surveyed between 3 November and 20 December 2022. The research is conducted with the New Zealand SME Banking Council biannually in May and November.