The blurring of personal and professional finances | New Zealand business magazine


Research has found that nearly 40% of Kiwi small businesses use their personal savings to support their operations. This is a behavior that can very quickly become problematic.

Personal and business finances are becoming increasingly unclear for small business owners, which can lead to difficulties in accessing business financing as lending criteria tighten.

Latest results from a survey commissioned by a small business loan specialist Prospa, reveals that when a business needs money, nearly two in five business owners (38%) dip into their personal savings to support their business activities. This is a very common trend among companies less than two years old, with 64% of companies stating that personal savings are their main source of funding.

“This behavior can be problematic,” warns Prospa chief executive Adrienne Begbie (pictured). “Small business owners should be careful when blurring the line between their personal and professional affairs, as this can lead to problems later on when funds are needed to achieve personal or professional goals.

“Current Consumer Credit and Credit Agreement (CCCFA) regulations have trained a very critical eye, analyzing every personal expense of Kiwis seeking loans. This can have an unintended but direct impact on the ability of small businesses to access funds, as financial institutions watch the funds mined for the business or vice versa due to the mixing of personal and business finances,” says Begbie.

With 44% of respondents indicating that they need additional financing to achieve their business goals, restrictions on access to funds could lead to increased frustrations for small business owners. It is more critical for businesses less than two years old, with 66% indicating a need for additional funds.

“We understand that cash flow is the lifeblood of any small business, and access to finance is really essential in the current climate. With supply chain issues and labor shortages affecting every industry, many businesses need funds to order additional inventory or want to capitalize on unexpected or immediate opportunities so they can grow. We want small business owners to know that we are in their corner and that there are alternatives to banks, here to support them in achieving their business goals and aspirations, whatever they may be,” says Begbie .

“With all the challenges our small business community has faced over the past two years, applying for funding needs to be easy, accessible, and based on business merit. As we enter a new fiscal year and As our borders begin to reopen, I hope our small businesses are feeling optimistic and more confident in growing their businesses.

“We know they deserve it,” Begbie says.

The survey was conducted online by One Picture between January 27 and February 10, 2022 among a sample of 525 small business owners in New Zealand with 1 to 50 employees.


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