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JUN 26 2019
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How can you get a loan to buy an existing business if you haven’t got security?

Posted by: Connie in Finance 101

According to the 2016 World Bank Doing Business survey, New Zealand is the easiest country in the world to start a business. There are two ways to run your own business – start from scratch or purchase an existing business.

Some New Zealanders choose to develop their own ideas and build their companies from the ground up. They face some barriers, though, including building a client base, hiring employees, and marketing their new business. Considering these reasons, some people decide to buy an existing business. They don’t have to reinvent the wheel since they have a successful formula to run their business. 

Buying a business is a big undertaking and you might need to get finance. However, how can you get a loan to buy an existing business if you don’t have any security?

The answer: An unsecured loan can help. Here there is no requirement for the borrower to provide any collateral or security for a loan.


How can you get a loan to buy an existing business if you haven’t got security?


Video Timeline

1. Why is it hard for your bank to approve your unsecured loan to purchase a business? 00:42

2. How can you get an unsecured business loan to buy an existing business? 02:14


But it’s hard for your bank to approve your unsecured loan to purchase a business. Here are some of the reasons why: 

High risk

An unsecured loan lets you borrow funds without using an asset as security, so your lender will take on more risk. If your business doesn’t run well and you don’t have enough cash flow to repay your remaining loan, it will become bad debt.


Long approval time

Compared with a home loan application, it takes longer to review your unsecured business loan because you need to submit a lot of supporting documents - including your business plan. There are many areas of uncertainty around whether or not you can successfully maintain a business. For example, if you don’t have any industry experience, or your business is not a chain store.


Not on bank’s top priority list

Many business loan amounts are between $200k and $300k. They are for small business loans. However, each bank staff member has a working target, which means they are more willing to invest their time on assessing large loan applications rather than small business loans.


How can you get an unsecured business loan to buy an existing business? 


Prosperity Finance keeps a good relationship with many New Zealand lenders, which allows us to search through many small business loan options and find the right lender to suit your situation and needs.

If you are looking to buy an existing business and you need help with cash flow, we can recommend a New Zealand lender. They have unsecured loans that could work for purchasing a small business. You can apply for up to half of the purchase price, or up to $300,000.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.


Prosperity Finance - here to help

Prosperity Finance gets your personalised mortgage plan sorted, empowering you to make the best long-term, informed decisions. We are professional mortgage brokers and are here to help. Give us a call today on 09 930 8999. 

Other Blogs You Might Like:

How much more mortgage can I afford? (Tips to quickly increase your borrowing power by 800k)

How to improve loan structure to save on interest, repay your debt faster, and become mortgage free?

When clients say: “I’ll contact you when I’m ready.” Why you shouldn’t wait until it’s too late.


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According to the 2016 World Bank Doing Business survey, New Zealand is the easiest country in the world to start a business. There are two ways to run your own business – start from scratch or purchase an existing business.

Some New Zealanders choose to develop their own ideas and build their companies from the ground up. They face some barriers, though, including building a client base, hiring employees, and marketing their new business. Considering these reasons, some people decide to buy an existing business. They don’t have to reinvent the wheel since they have a successful formula to run their business. 

Buying a business is a big undertaking and you might need to get finance. However, how can you get a loan to buy an existing business if you don’t have any security?

The answer: An unsecured loan can help. Here there is no requirement for the borrower to provide any collateral or security for a loan.


How can you get a loan to buy an existing business if you haven’t got security?


Video Timeline

1. Why is it hard for your bank to approve your unsecured loan to purchase a business? 00:42

2. How can you get an unsecured business loan to buy an existing business? 02:14


But it’s hard for your bank to approve your unsecured loan to purchase a business. Here are some of the reasons why: 

High risk

An unsecured loan lets you borrow funds without using an asset as security, so your lender will take on more risk. If your business doesn’t run well and you don’t have enough cash flow to repay your remaining loan, it will become bad debt.


Long approval time

Compared with a home loan application, it takes longer to review your unsecured business loan because you need to submit a lot of supporting documents - including your business plan. There are many areas of uncertainty around whether or not you can successfully maintain a business. For example, if you don’t have any industry experience, or your business is not a chain store.


Not on bank’s top priority list

Many business loan amounts are between $200k and $300k. They are for small business loans. However, each bank staff member has a working target, which means they are more willing to invest their time on assessing large loan applications rather than small business loans.


How can you get an unsecured business loan to buy an existing business? 


Prosperity Finance keeps a good relationship with many New Zealand lenders, which allows us to search through many small business loan options and find the right lender to suit your situation and needs.

If you are looking to buy an existing business and you need help with cash flow, we can recommend a New Zealand lender. They have unsecured loans that could work for purchasing a small business. You can apply for up to half of the purchase price, or up to $300,000.

Disclaimer: The content in this article are provided for general situation purpose only. To the extent that any such information, opinions, views and recommendations constitute advice, they do not take into account any person’s particular financial situation or goals and, accordingly, do not constitute personalised financial advice. We therefore recommend that you seek advice from your adviser before taking any action.


Prosperity Finance - here to help

Prosperity Finance gets your personalised mortgage plan sorted, empowering you to make the best long-term, informed decisions. We are professional mortgage brokers and are here to help. Give us a call today on 09 930 8999. 

Other Blogs You Might Like:

How much more mortgage can I afford? (Tips to quickly increase your borrowing power by 800k)

How to improve loan structure to save on interest, repay your debt faster, and become mortgage free?

When clients say: “I’ll contact you when I’m ready.” Why you shouldn’t wait until it’s too late.


Tags: