New Zealand SMEs’ (small to medium-size enterprises) fixation with
financing their businesses by borrowing against the family home is holding the
economy back according to Lock Finance, which has specialised in business
financing since 1889.
Lock Finance CEO Simon Thompson, who is also a
part time consultant to the World Bank, explains: `SME growth should be financed from the assets of the
company not through borrowing against the family home. We are far too reliant on the home, which
guarantees 90 per cent of bank lending to New Zealand SME business
and it’s holding the growth of our economy back. SMEs should understand that the country has a
world-class finance infrastructure, which they could be taking advantage of.
`Business owners should realise there is a more
diverse range of SME assets (such as plant, inventory and account receivables)
beyond traditional security such as property-based assets on which to base
their borrowing. New Zealand leads the
way in this area and the World Bank sees us as a ‘best practice’ country. We
have a very good legal framework (based on our Personal Property Securities
Act), a well-used online security registry system and active market lenders,
such as Lock Finance, who do not need property security when lending to the SME
sector.’
Mr Thompson points out that although we have one of the best SME finance
infrastructures in the world, New Zealand banks are simply not willing to use
it and our SMEs are not aware of the alternatives.
He says: `We have this very good infrastructure but we are not using
it. One problem is that our banks are
very good generalists but not specialists in this sector. The other is that
many of our SMEs are stricken with inertia. There is that old Boat-Bach-Beemer
attitude that once you have achieved a certain level there is no need to push
further. If our SMEs would only work their business that bit harder we could
take the economy to another level.’
Lock Finance, which has just signed on as a
National Patron of Business Mentors, sees support for mentoring as an integral
part of its vision
for the economic development of New Zealand.
Mr Thompson adds: `The country’s common future
after this recession lies with nurturing our small and medium business
sector. It’s never been more important
to provide small and medium enterprises (SMEs) with support so that they can
weather this period of uncertainty and be fit to take advantage of the upturn. It’s a great fit with Business Mentors New Zealand
and at Lock Finance we do believe that by supporting the principles of
business mentoring, we are investing in our own business opportunities as well
as being good corporate citizens. After
all, healthy businesses generate business.’
Lock Finance is a 100% owned New Zealand finance
company, providing financial services to small and medium-sized businesses
throughout New Zealand. Lock Finance aims to help SMEs optimise their
business growth by providing a range of fully integrated funding options including
working capital, trade finance, debtor finance and factoring.
