Research reveals growing financial needs of SMEs
As the festive season approaches, businesses across various sectors are gearing up for their Christmas trade or the holiday shutdown – which means more opportunities for advisers to guide clients on the benefits of non-bank lenders, Prospa said.
Retail, tourism, and hospitality sectors are bustling with activity, with businesses looking to bolster their inventory, hire additional staff, and prepare for heightened consumer spending. Meanwhile, industries like professional services may experience reduced cash flow as they wind down for holidays, aligning with a shift in customer focus towards relaxation.
According to recent Prospa research, conducted by RFI Group, SMEs in New Zealand are expected to need increased financing over the next 12 months, with around 65% reporting plans to apply for funding within the six months.
Prospa managing director Adrienne Begbie (pictured below) acknowledged the belt-tightening phase small businesses currently faced but said advisers could position themselves to take advantage of the festive period when trade was traditionally more abundant and enjoy exclusive Prospa Partner offers.
The common thread among businesses, regardless of industry, is the challenge posed by the cost of doing business, with the same research revealing that 60% of SMEs have encountered increased supply chain and labor costs while 58% anticipate the need to invest in their businesses to generate cash flow.
In response to these challenges, SMEs are actively seeking guidance, with nearly a quarter turning to professionals for advice on managing their business finances. This presents a prime opportunity for advisers to add value to SME clients’ businesses and build trust during a critical time.
The Prospa research identified three primary areas for which SMEs seek funding: purchasing equipment, maintaining cash flow, and business expansion. It also revealed the factors that might prompt SMEs to explore alternative lending sources, including reduced fees, quicker access to funds, enhanced flexibility, and expert advice.
However, the study also found that only two-thirds of SMEs are aware of alternative lenders, which means many businesses could miss out on the opportunity to leverage alternative lending sources to boost their businesses at one of the busiest times of the year, Prospa said.
With 65% of SMEs planning to apply for funding in the next six months, advisers have ample opportunities to guide clients on the benefits of non-bank lenders, potentially growing their own business through a diversified revenue stream.
One out of every three small businesses said they’d consider getting a loan from a specialised small business lender, Prospa said.
Read the full story on Prospa's research and how the lender can assist advisers and their SME clients.
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