Small business loan demand rises nationwide
Despite a dip in business confidence in April—driven by renewed concerns over politics, trade, and economic uncertainty—new Prospa data highlighted a surge in demand for small business finance in New Zealand, presenting clear opportunities for advisers and brokers to diversify their client offerings.
The top regions for loan applications were Auckland (3,077), followed by Canterbury (787) and Waikato (680)—reflecting continued lending momentum across the country.
Advisers encouraged to tap existing client networks
Adrienne Begbie (pictured), managing director of Prospa New Zealand, said the data presents a significant opportunity for advisers to tap into their existing networks and expand into SME lending.
“Small businesses account for 97% of all businesses in the country,” Begbie said. “Kiwi entrepreneurs are everywhere, and they might already be clients without you even knowing it. By getting to know your existing clients, and their individual circumstances, savvy advisers can diversify into SME lending.”
The Prospa data showed that the top four industries for applications and originations were building and trade, professional services, hospitality, and retail.
“Fostering relationships with SME owners, particularly in these key industries, can lead to surprising business opportunities,” Begbie said.
Why SMEs are borrowing: Working capital still leads
According to Prospa’s nationwide “use of funds” data, working capital continues to dominate SME funding needs, accounting for 42% of applications.
Other reasons include expansion/growth (11%), purchasing inventory (9%), buying equipment (7%), and paying suppliers (7%).
“While working capital is the number one reason SMEs are seeking funding, it’s encouraging to see that over 10% of entrepreneurs are directing funds toward growth and expansion, indicating confidence despite the current economic challenges,” Begbie said.
Sector insights: Funding purposes vary by industry
Prospa’s breakdown of SME lending across key sectors revealed unique financial needs:
Building and trade
- Working capital – 50%
- Pay suppliers – 11%
- Expansion/Growth – 9%
- Buying equipment – 6%
- Purchasing inventory – 4%
Professional services
- Working capital – 53%
- Expansion/Growth – 11%
- Buying equipment – 6%
- Expansion/Growth – 4%
- Remodelling/Expansion – 4%
Hospitality
- Working Capital – 33%
- Expansion/Growth – 13%
- Remodelling/Expansion – 9%
- Renovation – 6%
- Buying Equipment – 11%
Retail
- Purchasing inventory – 31%
- Working capital – 22%
- Expansion/Growth – 8%
- Purchasing inventory – 6%
- Pay suppliers – 8%
Lack of awareness still a barrier
While funding demand is strong, a major barrier remains: 35% of SMEs are still unaware of alternative lending options beyond traditional banks.
“There’s a real opportunity here,” Begbie said. “Advisers who proactively engage with their small business clients and understand their funding needs can deliver more comprehensive financial advice, building stronger relationships in the process.”
“If you’re not asking the question, someone else will.”
