Quick answer
Short-term and bridging business loans cover a gap of weeks to around two years until a known event repays them, such as a property sale, a refinance, a contract payment or a business sale. In New Zealand they're offered mainly by private and non-bank lenders, often secured by property. They're quick to arrange but cost more and carry real risk if the exit runs late, so focus on the exit plan and its backup.
Key points
- Short-term loans bridge a gap until a known event repays them.
- The exit plan is the heart of the deal; have a backup.
- Often property-secured, from private and non-bank lenders.
- Watch minimum interest, extension and default costs closely.
Some things at the market are meant to be eaten today, not stored in the cupboard for a year. Short-term and bridging loans are like that: designed to be used for a specific gap and then cleared. They’re powerful when the gap is real and the end is in sight. They’re expensive and risky when the end keeps moving.
What are short-term and bridging loans for?
These loans pay for something now and are repaid from a known event later. Typical business uses include:
- property timing: buying new premises before the old ones sell;
- settlement deadlines: completing a purchase while longer-term finance is finalised;
- tax and supplier bills: clearing an IRD debt or a supplier while waiting on a large receivable;
- contracts: funding materials and labour until a project pays out;
- business sales and buyouts: bridging until a sale completes; and
- refinancing: a stepping stone while a bank processes a longer-term loan.
Who sells short-term business loans?
Mostly private lenders and non-bank lenders, plus some online lenders for smaller unsecured amounts. Larger bridging loans are usually secured over property by a first mortgage, second mortgage or caveat. Land Information New Zealand explains that a caveat stops certain dealings with land proceeding without the caveator being involved, which is why it suits some quick, short loans.
Why is the exit plan so important?
On this shelf, how you’ll repay matters as much as what you’re offering as security. A lender will want to know:
| Exit question | What a strong answer looks like |
|---|---|
| What repays the loan? | A specific event: a signed sale, an approved refinance, a contracted payment |
| When will it happen? | A realistic date with time to spare inside the term |
| How certain is it? | Signed agreements, approvals, or a track record |
| What if it’s late? | A credible backup: another sale, a refinance, an extension budget |
If the honest answer to “what repays the loan?” is “we hope trading improves”, this probably isn’t the right shelf. A longer-term loan or a conversation about restructuring may serve better.
What does short-term finance cost?
Short-term loans are priced for speed and risk. Watch for:
- establishment and broker fees, often deducted at settlement;
- prepaid or capitalised interest;
- minimum interest periods that apply even if you repay early;
- legal, valuation and discharge costs;
- extension fees if you need more time; and
- default interest and charges if the term runs out.
The cost of finishing early or late can matter more than the running cost, so compare offers at several exit points using the offer comparer and read early repayment and exit costs.
If you need to bridge a gap and want to know your options, send a quick enquiry. There’s no credit check, and a real person reviews it.
What are the risks?
- Exit delays. Property sales and refinances slip. Build in a buffer.
- Rolling over. Repeated extensions turn a short-term loan into an expensive long-term one.
- Property at stake. Secured loans put property at risk if the exit fails.
- Directors’ duties. The Companies Office reminds directors not to agree to obligations the company can’t meet. Bridging a business that has no realistic way to repay can create personal risk.
What does a well-planned bridge look like?
Illustrative example. A Tauranga engineering firm has signed to buy a larger workshop, settling in six weeks, and listed its current building for sale. The bank will lend on the new workshop but won’t release funds until the old building sells. A private lender offers a nine-month bridging loan secured by first mortgage over the old building, with no minimum interest period and a clear extension fee. The firm’s exit is the sale of the old building, with a backup of refinancing it to the bank as a leased-out investment. The building sells in month five and the loan is repaid with only five months of interest.
What should you prepare before you apply?
Short-term lenders move quickly when the paperwork is ready. Have these to hand: details of the property offered as security and any existing mortgage; evidence of the exit, such as a signed sale and purchase agreement, a bank’s conditional approval or the contract that will pay out; a simple timeline showing when the exit should land; identification for directors and any guarantors; and a summary of what the money will be used for. If there’s IRD debt or a past credit issue, say so upfront. The faster a lender can understand the whole picture, the faster it can commit, and the less likely you are to pay for a rushed, poorly matched deal.
Is a short-term loan ever the cheapest option?
Occasionally, yes, when you look at total dollars rather than running cost. A three-month bridge that lets you avoid a penalty, secure a discount or complete a profitable sale can cost less overall than the alternative of missing the deal or paying break costs on a long-term loan. The key is to count every dollar on both sides of the comparison, not just the price of the money.
How do you choose the right short-term offer?
- Pick a term that covers the realistic exit date plus a buffer.
- Prefer offers without long minimum interest periods if the exit could be early.
- Get extension costs in writing before you need them.
- Compare the total cost at early, on-time and late exit points.
- Have your lawyer check the security and default clauses.
Need to bridge a gap?
Tell us what you need, what will repay it and when. Enquiring is free and doesn’t touch your credit file. Your details aren’t broadcast to every private lender in the country; one specialist reviews your situation and calls you. Please be accurate about the exit timing and property details on the form, so we can match you with a lender comfortable with your plan. See if you qualify.
Frequently asked questions
What is a bridging loan for a business?
It's a short-term loan that bridges the gap between needing money now and receiving money later from a known source, such as selling a property, completing a refinance or receiving a contract payment.
How long do short-term business loans last?
Usually from a few weeks to around 24 months, depending on the lender and the exit. The term should comfortably cover how long the exit realistically takes.
What is an exit strategy?
It's how you'll repay the loan in full at the end of the term, for example by selling an asset, refinancing to a bank or receiving a known payment. Lenders on this shelf assess the exit as closely as the security.
What if my exit is delayed?
Many lenders will consider an extension, usually for a fee, and default interest or charges may apply if the term expires without repayment. Talk to the lender early and know these costs before you sign.