Unsecured business loans in New Zealand

Plenty of good New Zealand businesses don’t own property. They lease their shop, rent their workshop or run from a home office in a house that’s not theirs to borrow against. For these businesses, unsecured lending is often the only realistic way to get funding quickly — and for many, it’s the preferred way even when property is available.

How do unsecured business loans work?

Instead of taking a mortgage or caveat over property, an unsecured lender looks at the business itself:

• Your bank statements show how much money comes in, how steadily and what goes out.
• Your trading history shows the business is established.
• Director guarantees give the lender a personal commitment from the people running the business.

Some unsecured lenders also register a general security interest over business assets on the Personal Property Securities Register. That isn’t a mortgage over your home, but it is a claim over business assets if things go wrong. We’ll explain exactly what each option involves before you choose.

How much can I borrow, and for how long?

Factor	What lenders typically look for
Amount	$5,000 to $500,000, sized on turnover
Trading history	Often six to twelve months or more
Monthly deposits	Steady, with no big unexplained drops
Commitments	Existing loans and arrangements that leave room for new repayments
Term	Commonly a few months to a couple of years
Repayments	Often daily, weekly or fortnightly direct debits

Lenders often size unsecured facilities as a proportion of your average monthly deposits. A business that turns over consistently will usually be offered more than one with the same annual total but big seasonal swings, unless the lender looks at a full year of statements.

When is unsecured the right choice?

Unsecured lending is a strong fit for:

• Short-term cash flow gaps — GST, payroll, stock, a slow month.
• Businesses without property, or owners who’d rather not put their home on the line.
• Smaller amounts where registering security would add cost and time.
• Speed — smaller amounts can be funded the same day.

It’s a weaker fit when you need a large amount, a long term or the lowest possible total cost. In those cases, a second mortgage or first mortgage business loan is often more suitable. Our guide comparing secured and unsecured business loans covers the trade-offs in depth.

What lenders check on your bank statements

Unsecured lenders read bank statements closely. They look for:

1. Average monthly deposits and whether they’re growing, steady or falling.
2. Regular outgoings — rent, wages, suppliers, existing loans.
3. Dishonours and overdrawn days. Occasional ones are normal; frequent ones are a concern.
4. Payments to other lenders, including short-term lenders.
5. Payments to Inland Revenue and whether they’re regular.
6. Gambling or unexplained personal transfers from the business account.

A clean, well-run account makes approval faster and the offer stronger. If you’d like to know where you stand, check what you may qualify for — there’s no credit check at that step.

What does a personal guarantee mean?

A personal guarantee means that if the business can’t repay, the lender can pursue the guarantor personally. For directors of a limited company, that removes some of the protection the company structure normally offers. Before signing, make sure you understand the amount guaranteed, whether it’s limited or unlimited, and what happens if the business is sold or closed. Independent legal advice is always worth considering.

An illustrative example

An illustrative Auckland marketing agency with steady monthly retainers wants to hire two staff ahead of a new client starting. It rents its office and has no property. Its bank statements show consistent deposits and no dishonours. An unsecured loan sized to about two months of the new salaries, repaid weekly over nine months, funds the hires without tying up any assets. Once the new client’s fees are flowing, the loan is repaid from the extra revenue.

Comparing unsecured offers

When comparing unsecured offers, look beyond the headline. Compare the total amount repayable in dollars, the repayment frequency and size, establishment and other fees, early repayment terms and whether a security interest is registered over business assets. Two offers for the same amount can differ significantly once all of these are considered, and a slightly smaller loan with gentler repayments is often the better choice for cash flow.

Find out what you could borrow unsecured

If you’d rather not use property, or don’t have it, unsecured lending may be exactly what you need. Our process is simple: a short enquiry with no credit check, no blasting your details out to a crowd of lenders, and a real person who looks at your figures and calls you back.

Please answer the form accurately — especially your monthly turnover, time trading and the amount you need — so we can match you properly first time. See your unsecured options.