Mixing personal, business finance can be risky
More than one in five SMEs are turning to advisers to help navigate lending options after CCCFA regulations were amended, according to research conducted by Prospa NZ.
The survey conducted by the small business lender shows how important broker advice is to SMEs to safeguard business owners from possible risk.
Prospa NZ managing director Adrienne Begbie (pictured) said the blurred lines between personal and business and the impact of CCCFA amendments mean small businesses mixing finance could make it difficult for them in future to secure business loans.
“This study demonstrates areas of opportunity for advisers to support their small business clients,” said Begbie.
“Advisers will be well aware of the unintended consequences of mixing personal and business finance, with it even more important now as the introduction of the Credit Contract and Consumer Finance (CCCFA) regulations heavily impacts consumers. Advisers can provide valuable advice in separating the two, and work with business owners to establish best practices around managing these finances.”
Read more: Prospa urges advisers to reach to SMEs ahead of new financial year
With recent lending guidelines updated by the CCCFA in December, SMEs can benefit from knowledgeable advisers who are aware of updated legislation.
Advisers can benefit from the fact that 44% of small businesses require additional funds to achieve business goals. This figured rose to 66% for younger businesses less than two years old.
“As trusted sources, advisers are in a position to help small businesses with these challenges,” Begbie said.
“Especially among owners with less experience, advisers can play a key role in supporting and better educating them, not only on policy and regulation changes but of the wider ecosystem of funding options available to their small businesses, so they can achieve their goals and priorities for the year ahead.”
Read more: Fisher Funds aims to boost broker network
Conducted amongst 525 small business owners with between one and 50 employees, the survey found personal savings was the number one source of funds for 38% of Kiwi small businesses, jumping to 64% for those less than two-years old.
Mixing finances might affect more than two in five (44%) small businesses that require more funds to achieve their business goals.
Almost two in five (38%) business owners would dip into their personal savings to support their business operations, with 64% of those surveyed stating their personal savings was their primary source of funding.
