Loan purposes
What established SMEs borrow for
Established New Zealand SMEs borrow for ten main purposes: working capital, buying a business, partner buyouts and succession, expansion, refinancing, fit-outs, contracts, seasonal stock, and funding secured on property or on turnover. Each page explains how that purpose is usually funded.
Start from your situation
| If this sounds like you… | Read |
|---|---|
| Customers pay slowly and wages or GST are due | Working capital |
| You have agreed to buy an existing business | Buying a business |
| A co-owner is leaving or the next generation is taking over | Partner buyout & succession |
| You are opening another location or adding capacity | Expansion & new sites |
| Several loans, cards or IRD arrears are squeezing cash | Refinance & consolidate |
| Premises need building work, joinery or new equipment | Fit-outs & premises |
| You have won a job that pays in arrears | Contracts & tenders |
| Stock and staff must be paid for before the busy season | Seasonal stock builds |
| You own property with equity and want the simplest route | Property-secured loans |
| You want funding based on turnover, without property | Unsecured loans & credit lines |
All ten purposes
- Typical use
- Payroll, supplier runs, GST and PAYE, debtor gaps
- Security options
- NZ property (1st or 2nd mortgage) or unsecured
- Covers
- Purchase price, goodwill, stock, day-one working capital
- Usual security
- Buyer's NZ property, 1st or 2nd mortgage
- Common uses
- Shareholder exit, partner split, family succession, management buy-in
- Security
- Home, rental, commercial property or land; or unsecured
- Typical costs
- Lease deposits, fit-out, equipment, hiring, launch stock
- Security
- NZ property (1st or 2nd mortgage) or unsecured
- Can refinance
- Short-term loans, cards, equipment finance, IRD debt
- Security
- NZ property, 1st or 2nd mortgage; or unsecured
- Covers
- Building work, services, joinery, equipment, signage
- Security
- NZ property (1st or 2nd mortgage) or unsecured
- Covers
- Materials, labour, hire, mobilisation, retentions gap
- Security
- NZ property (1st or 2nd mortgage) or unsecured
- Covers
- Stock, seasonal staff, freight, marketing, deposits
- Security
- Unsecured, or NZ property 1st or 2nd mortgage
- Security
- Home, rental, commercial property or land in NZ
- Mortgage position
- First or second, even with an existing mortgage
- Eligibility
- Usually trading 6+ months
- Amount based on
- Turnover and business bank statements
About loan purposes
Can one loan cover more than one purpose?
Yes. A common example is an acquisition loan that also includes working capital for the first months of ownership, or a refinance that also funds a fit-out. Tell us everything the money is for when you enquire.
Do you arrange personal or consumer loans?
No. Every facility we arrange is for business purposes only, although personal property such as a home can be used as security for the business loan.
Which is cheaper, secured or unsecured?
Property-secured lending is generally priced more favourably than unsecured lending because the lender carries less risk. Every loan is still priced on the individual circumstances.
Next step
Talk it through with a lending specialist
Tell us what the money is for and roughly how much. The enquiry takes about 60 seconds, costs nothing and does not touch your credit score.