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Finance no problem for credit-worthy NZ businesses

12 October 2005

Access to finance not a problem for credit-worthy NZ businesses

The majority of New Zealand businesses can access finance when they need it according to the full report on the 2004 Business Finance Survey, released by Minister for Economic Development, Jim Anderton today.

In the twelve months to August 2004, over one-third of New Zealand businesses requested new finance. Ninety percent of these requests resulted in either some or all of the finance being received.

"This is a very positive indicator of the general health of New Zealand’s financial system. It shows that when credit-worthy companies need funds to grow, they are available," Jim Anderton said.

The survey results also show New Zealand businesses prefer debt finance, the majority of which comes from banks. Equity finance, which encompasses different forms of investment from friends and family to publicly listed shares, is much less common. Only 6 percent of businesses requested equity finance in 2004 as indicated by the survey. This is an issue which requires further analysis.

The report provides information on the current sources and amounts of debt and equity, businesses’ use of assets as security for raising finance and the characteristics of the person responsible for arranging finance.

It also includes data on investment in firm expansion and projected turnover growth. Twenty-two per cent of businesses invested in expansion during their last financial year, with such investment being more common among larger businesses and manufacturers. The majority (76 per cent) of businesses expected positive turnover growth.

The Business Finance Survey was developed jointly by the Ministry of Economic Development (MED) and Statistics New Zealand. A sample of businesses with between 1 and 500 employees in a wide selection of industries were surveyed, and there were 4,775 survey respondents.

It is a descriptive report only - an interpretive report is planned to be completed by April 2006.

MED will use the data to inform its ongoing Access to Finance work programme. The survey will help determine the extent to which particular categories of firms, if any, are systematically disadvantaged with respect to financing.

A copy of the report is available via the Statistics New Zealand website www.stats.govt.nz.

ENDS

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