New Zealand banks channel only 18 per cent of lending to businesses excluding agriculture, well below the 30 per cent share recorded in Australia at the same point.
The OECD Economic Surveys: New Zealand 2026, released in Wellington on 7 May, highlights this structural shortfall in SME finance.
Banks allocated NZ$128 billion to business lending excluding agriculture as of December 2024. Housing absorbed around 60 per cent of total bank lending over the same period.
This allocation leaves most small manufacturers, trades firms and food producers reliant on high-cost alternatives or personal guarantees.
Prudential settings and the housing tilt
Reserve Bank prudential settings and capital rules have reinforced the tilt toward housing assets.
The OECD report notes that even the Business Finance Guarantee Scheme, which ended on 30 June 2021 with the Crown taking up to 80 per cent of default risk, failed to shift bank underwriting practices. According to the Treasury's published documentation on the scheme, participating banks continued to require personal guarantees or property security in many cases.
The Reserve Bank of New Zealand noted in its November 2025 Financial Stability Report that while the non-performing share of business loans had increased, it remained low compared to previous downturns. Low default rates have, however, come at the expense of broader credit access.
Venture capital growth masks the missing middle
Venture capital has grown strongly for high-growth tech firms, reaching nearly NZ$600 million in 2024 from NZ$50 million in 2015.
Most SMEs never access equity markets and require debt products instead.
The OECD recommends a national pooled SME loan securitisation platform, a credit register and streamlined private placements to widen funding options. It also calls for revenue-based finance, export working-capital guarantees and SME-friendly procurement rules.
Literacy, productivity and the reform path
New Zealand records high general financial literacy yet lacks a dedicated national programme for SMEs on cash-flow management and pricing.
Productivity growth stays below the OECD average, with capital intensity lagging peers such as Australia and Sweden.
The survey projects GDP growth of 1.4 per cent in 2026 and 2.3 per cent in 2027 if capital-market depth improves.
Over the next three to five years, targeted reforms to ease collateral requirements could free bank capacity for productive lending while reducing pressure on household balance sheets.
Market-led solutions such as securitisation and private placements offer a lower-burden path than further regulatory layering.
The four major banks — ANZ, ASB, BNZ and Westpac — and the Reserve Bank of New Zealand were not available for comment at the time of publication.
