Successful SMEs Struggling To Secure Business Loans During COVID-19
While many businesses have suffered from the economic fallout of COVID-19, some companies haven’t just survived – they’ve thrived. But despite bucking the trend, many of these SMEs are suffering from their own success as tightening credit availability stymies their ability to grow.
So how do these rising stars get enough capital to capitalise?
Businesses bucking the trend
COVID has put the New Zealand economy on the backfoot, with recent GDP research from Statistics NZ showing that the country is now officially in a recession. Businesses all over the country have been hit hard by lockdowns and border closures, and many are scrambling to create or retain the cash flow they need to survive.
However, some businesses have done nothing but grow during an otherwise tumultuous time, as COVID created a new normal where entrepreneurs with the right services and products found themselves strongly in demand.
The courier and delivery services industry, for example, saw revenue growth of over 10% in 2020 – an industry that was, until then, seeing slowed growth. When lockdowns force people inside to use online shopping, the clear winners are those businesses who deliver the goods.
Tightening credit for small business loans
Unfortunately for these successes, tightening credit availability has meant they may not be able to secure finance to capitalise on and accelerate their growth.
The Reserve Bank’s latest survey of the major lenders has revealed that they expect SME credit availability to be tight compared to the previous 3 years, making it harder for growing businesses to get a loan. Meanwhile, the Government has released their own business support package in the form of low-interest loans, but if you can’t prove a 30% actual or expected drop in revenue, then your business is ineligible.
More business owners turn to non-bank lenders
We’ve increasingly seen that growing SMEs are turning to non-bank lenders, including GetCapital. With a broader range of solutions and a more holistic approach to lending, we’re often able to help when the major lenders can’t – even when credit availability is tight.
If your business has grown during COVID-19 and you need capital to capitalise on growing opportunities, apply for a secured business loan through GetCapital now.