New Zealand’s small-business owners increasingly are using their own personal credit cards to finance their companies, research from Massey University’s Center for Small and Medium Enterprise Research has found.
The discovery came when the center surveyed 1,808 small and midsize companies in the country late in 2010 to examine how they were coping with a recession that had gripped the country for more than two years.
The survey found that 87% of respondents said they were using credit cards to fund their business operations last year, up from 67% that were in 2009.
Personal credit cards have become the most widely used form of business finance in New Zealand alongside trade credits, David Deakins, the center’s director, said in a note accompanying the survey results.
The center did not respond to repeated PaymentsSource requests for comment.
“For a business owner, this is a relatively flexible way to finance cash flow and meet working capital requirements,” Deakins wrote. “There is a risk they may get bad debt, particularly in times of recession. But if it helps cash flow over a temporary period, it could be a good solution.”
According to the center, 53% of the firms surveyed had staffs of five workers or less, 44% had six to 49 employees, and 3% employed 50 to 99 workers.
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