Many NZ small businesses may need a business loan at some point. There are many common purposes for a business loan – you may need to upgrade your equipment, or cover unexpected expenses, or other uses that require more cashflow.

Just like you we are a small business, and we understand how challenging it is to grow a business without access to capital for extra cashflow. Sometimes, having that lump sum of money can be a determining factor in the success of your business.

However, getting the money you need from a bank can be difficult, especially when you’re looking to apply for an unsecured loan for your business. An unsecured loan refers to those that do not require securities of property, vehicle, or equipment.

Fast unsecured business loans NZ 

Video Timeline

1. Getting an unsecured small business loan from a bank, why is it hard? - 01:29

2. The unsecured business loan that might help you - 04:26

1. Getting an unsecured small business loan from a bank, why is it hard?

For many NZ small business owners, business loans are the only option that might be available. If you’re trying to apply for a business loan from your bank, especially an unsecured one, you might be struggled to getting the funding. This is because an unsecured business loan is:

(1) Higher risk

With a secured loan, the lender secures the amount they lend to you against your property. In some worst-case scenarios, they can mortgagee sell your property to repay the remaining loan. Unlike a secured loan, an unsecured business loan often involves higher risks. From banks’ perspective, there will be lots of work to assess the risk of your business. If your lender is not confident that you are able to pay back the loan, they’ll decline your application.

(2) Longer turnaround time

Three or four weeks is a common turnaround time for assessing small business loans. Compared with home loans, business loans often have smaller borrowing amounts on average. Banks have little incentives to approve smaller loans with huge efforts.

(3) Strict lending criteria

Even when you apply for a secured business loan with your bank, you still need to meet the criteria of serviceability and equity assessments. If you fail to pass, your loan application will be declined.

(4) Other reasons

There are a couple of other reasons that business owners don't get approval from banks or they don't want to:

You may not want to mix your business with your personal lending (home loans). You’re worried if you tell the bank that you need extra cash to pay your supplier for example, it probably indicates that you have cash flow crisis.

Besides, a business loan is tax-deductible, and you can claim the interests against your business income. If you top up from your home loan, and the loan is unlikely to be under your business name, that means your accountant will need to do some extra work to make it tax deductible. It will occur more accounting fee and make it less transparent.

2. The unsecured business loan that might help you

There are some options for an unsecured small business loan. At Prosperity Finance, we work with many reputable non-bank lenders all over New Zealand who offer more flexible and customised solutions to suit a range of different needs. We would like to introduce one of the best solutions in the market that can help the success of your business.

This lender is New Zealand’s small business lending specialist and they purely focus on small business loans. They can help you access funds for your business growth opportunity and cash flow support without all the fuss. Here are the product details:

Loan amount – between $5,000 and $300,000 (No security required to access up to $100K)

Loan term – from 3 months to 24 months

Fast turnaround time – funded within one or two days.

Special offer – approved clients (settle before March 31, 2021) make no repayments for the first 8 weeks on business loans. The interests will be added up to the loan, and you pay at the end of loan term.

Eligibility – the business has been trading for at least 6 months, ideally 12 months or more, and the monthly turnover is at least $6,000.

Prosperity Finance - Here to Help

If you think an unsecured small business loan is the right financing option, or you would like to get professional advice, call us at 09 930 8999 today.

Read More:

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

Getting a home loan when you’re self-employed during Covid-19, is it harder?

Why running your new business under old company’s name may negatively impact your loan application?

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.