Business finance: The old ways of borrowing vs today
But things are changing and new forms of small business lending are becoming more popular. Here are some reasons why:
New research from Prospa has shown that the post-COVID small business recovery is gaining momentum, with one in three Kiwi small business owners planning to invest in new products and services in 2021.
But cash flow has been a major stumbling block for businesses getting running again. For instance, two thirds of New Zealand SME owners reported that a lack of cash delayed their reopening after lockdown.
COVID-19 has only aggravated long-standing trends showing small business owners are finding it more difficult to access funding from traditional lenders such as banks.
In fact, Prospa’s own survey of more than 200 New Zealand small business owners found that almost three in five feel it is getting harder to access funding from banks and other traditional lenders. They’re finding there’s too much red tape, too many delays and finance products aren’t suited to the reality of small business.
This comes as no surprise to Geoffrey Hughes, director of Hughes Judd Accounting.
“Small businesses generally need small amounts fast as they tend to be more reactive to business needs,” he says.
Speed is of the essence
The findings echo those from a 2019 Small Business Council of New Zealand (SBC) report, which found the relatively slow pace of traditional bank loan approvals and funding as a key shortcoming for many small businesses.
“Businesses are often left waiting on the outcome of approval processes and they may miss opportunities to develop, grow and reach their potential,” the report said.
Interested in learning more about today’s way to borrow? Talk to a Prospa small business lending specialist on 0800 005 797 or find out more.
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