Shopping for a business loan in New Zealand: a seven-step plan

Nobody walks into a Saturday market and buys the first thing they see. You do a lap, check what’s fresh, compare a couple of stalls and then buy with confidence. Borrowing for your business deserves at least the same care, because the difference between a good loan and a poor one can run to thousands of dollars and a lot of sleepless nights.

This plan walks you through shopping New Zealand’s business lending market in seven steps. It works whether you’re borrowing $20,000 for a van or a couple of million against commercial property.

Step 1: What exactly are you shopping for?

Before you talk to anyone, write down four things:

1. The amount. Not a round guess, but a figure backed by quotes, invoices or a forecast. Add a sensible buffer for costs you haven’t priced yet.
2. The purpose. Equipment, stock, wages through a seasonal gap, an IRD bill, a fit-out, buying a business. The purpose shapes which products and lenders fit.
3. The timing. When do you need the money in the bank? Be honest about the real deadline, not the hopeful one.
4. The repayment plan. Will repayments come from ordinary trading, a one-off event like a property sale, or both? How long will you need?

business.govt.nz suggests modelling repayments for different terms and building them into your cash-flow projections before committing. A simple forecast with pessimistic, realistic and optimistic scenarios, as its cash-flow guidance recommends, is the best shopping list you can carry. If the loan only works in the optimistic scenario, think again about the amount or the term.

Also decide what you’re willing to put on the line. Are you prepared to offer property? Which property? Are you comfortable with a personal guarantee? Knowing your limits before a lender asks makes the conversations quicker and clearer.

Step 2: Have you checked your own credit and tax position?

Lenders will look at your credit reports and your Inland Revenue position, so look first.

Credit reports. New Zealand has three main credit reporters: Centrix, Equifax and Experian. The Privacy Commissioner explains that you can request the information they hold about you, that standard requests are free, and that urgent requests within three working days cost no more than $10. Check all three for errors, old debts you thought were closed and enquiries you don’t recognise. Fix what’s wrong before a lender sees it.

IRD account. Log into myIR and check what’s owed across GST, PAYE, provisional tax and income tax, and whether every return is filed. If there’s a debt you can’t pay in full, Inland Revenue lets you apply for an instalment arrangement in myIR, and says an agreed arrangement means fewer penalties than paying irregularly without one. An arrangement that’s being met reads much better to a lender than an unmanaged debt.

If there’s anything awkward in either place, write a short, honest explanation now. You’ll use it in Step 5.

Step 3: Is your document pack ready?

A complete pack is the fastest way through any lender’s door. Gather:

• photo ID for every director and likely guarantor;
• business details: legal name, NZBN or company number, structure, address;
• recent statements for every business bank account, complete and unedited;
• financial statements for the last one or two years, and year-to-date management accounts;
• your IRD summary and any arrangement;
• a list of existing debts, leases and guarantees;
• quotes or contracts showing what the money is for; and
• for property security, title details, rates notices and mortgage statements.

Our documents checklist breaks this down by loan type, and our guide on how lenders read bank statements explains what they’ll notice.

Step 4: Which stalls belong on your shortlist?

New Zealand’s business lending market has many kinds of lender, each with a sweet spot:

If your situation looks like…	Start with…
Established, profitable, clean credit, time to spare	Main banks and smaller banks
Property equity, need speed or flexibility	Private and non-bank lenders
No property, steady turnover, smaller short need	Online lenders or unsecured non-banks
Buying a vehicle or equipment	Asset financiers and finance companies
Waiting on business customers to pay	Invoice financiers
Complex, urgent or previously declined	A broker who knows the wider market

Our Which stall fits me? quiz gives you a starting shortlist in under a minute.

If you’d like a real person to build the shortlist with you, start a 60-second enquiry. There’s no credit check to ask, and we don’t share your enquiry around the market.

Step 5: Why talk before you apply?

This is the step most borrowers skip, and it’s the one that protects your credit file. New Zealand’s consumer protection guidance warns that applying for several sources of credit in a short time can count against your score. So start with conversations, not applications.

In each conversation:

• explain the purpose, amount, timing and repayment plan from Step 1;
• mention any awkward issues from Step 2 upfront;
• ask whether the lender has appetite for this kind of deal right now;
• ask what security, guarantees and documents they’d want;
• ask for an indicative idea of the structure and fees; and
• ask whether anything you’re about to do counts as a formal application or will be recorded as a credit enquiry.

Our questions to ask a lender page has the full list. After two or three conversations, you’ll usually know which lender is most likely to say yes on terms you can live with. That’s where your formal application goes.

Step 6: How do you compare the offers?

When written offers arrive, turn each into the same handful of dollar figures:

• money in hand after any fees deducted at settlement;
• total cost of finance: total repayments, plus fees not included, minus the amount borrowed;
• cost per $1,000 borrowed, to compare different-sized offers;
• average monthly outlay, to test against your cash flow;
• exit cost at a realistic point if you repay early; and
• security and guarantees, as risks rather than dollars.

The offer comparer calculates all of this for up to three offers and flags risks such as property security, daily repayments and unclear exit fees. Our guide on why offers differ explains why the same loan can be quoted so differently.

Step 7: How do you close the deal well?

Before you sign:

1. Negotiate. Use a competing offer to ask for specific changes: lower fees, lighter security, a capped guarantee, a smaller early repayment fee. Our negotiation guide explains how.
2. Read the conditions. List every condition precedent and start on them immediately, because they’re the most common cause of settlement delays. See checking a loan offer.
3. Get legal advice. Especially for property security and personal guarantees.
4. Diary the obligations. Repayment dates, reporting covenants, review dates and the end of any fixed period.
5. Plan the exit. For short-term loans, write down how and when you’ll repay, and what happens if that’s late.

What does the plan look like in real life?

Illustrative example. A Whanganui furniture maker wants to expand into the empty unit next door. In Step 1 she prices the fit-out and machinery at $140,000 plus a $15,000 buffer, with repayments from extra sales over four years. In Step 2 she finds a closed account still showing as open on one credit report and gets it corrected; her IRD account is current. In Step 3 she pulls statements, accounts and quotes into one folder. In Step 4 the quiz suggests her bank, a smaller bank and an asset financier. In Step 5 the conversations show her main bank is keen but slow, while the smaller bank can move within her timeframe. She applies once, to the smaller bank. In Step 6 she compares its offer with an asset financier’s offer for the machinery alone. In Step 7 she negotiates the establishment fee down and gets the guarantee capped. Total formal applications: one.

Ready to start shopping?

The best loans go to borrowers who know what they want and can show why it works. If you’d like a real person to walk the market with you, tell us what you need. Asking takes about a minute and involves no credit check. We won’t spray your details across a crowd of lenders; one specialist reads your enquiry, works out which stall fits and calls you. Please fill in the form accurately, including anything awkward, so the first lender we suggest is the right one. See if you qualify.