Businesses that Ask, Receive Finance

Businesses that Ask, Receive Finance

Over one-third of New Zealand businesses with between 1 and 500 employees sought additional finance during the 12 months to August 2004, according to Statistics New Zealand. Ninety percent of finance requests made by businesses resulted in either some or all of the amount sought being received.

The characteristics of businesses' most recent financing request within the 12 months to August 2004 were examined. Finance can be provided as either debt or equity. Survey participants were asked to include details of all requests for finance, whether fully approved, partly approved, declined or withdrawn. Results from the Business Finance Survey show that 36 percent of businesses had sought some form of finance, most of which was in the form of debt finance. The debt finance option was sought by 34 percent of businesses, compared with 6 percent for equity finance.

There is a range of available sources for businesses to approach for additional finance, and the finance may be sought and received from one or more of these sources.

For debt finance, the predominant sources were banks and finance companies, which were a source of additional debt finance for 72 percent and 26 percent of businesses, respectively. Debt finance includes any finance that the business must repay (for example overdrafts, credit cards, and convertible debt).

For equity finance, the predominant sources were individuals in control of the business or their friends/family, which were a source of additional equity for 83 percent and 11 percent of businesses, respectively. Equity finance includes additional investment from existing owners of the business, and any finance received in exchange for a share in the ownership of the business.

The Business Finance Survey is the first survey of its type to be conducted in New Zealand, and was developed by Statistics New Zealand in collaboration with the Ministry of Economic Development (MED). Statistics New Zealand and MED will jointly publish a full report from this survey in June 2005.

Brian Pink
Government Statistician
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