Why new businesses struggle to borrow
Banks lend to businesses based on what they’ve done: two or three years of accounts, tax returns, a history of paying suppliers and IRD. A business that opened last month, or hasn’t opened yet, has none of that. So even a well-planned venture with an experienced owner can be declined simply for being new.
Our lending partners take a different starting point. If the loan is secured on New Zealand property, the property and a sensible plan carry the assessment. Trading history is useful context, not a requirement.
What property can secure a new business loan?
- Your home, even if it already has a mortgage, via a second mortgage behind the existing loan
- A rental or investment property
- Commercial or industrial property
- Land, including bare sections and lifestyle blocks, case by case
- A supporting party’s property, such as a parent or business partner who agrees to provide security
Loans range from $20,000 to $1m. See unusual or complex security if your property doesn’t fit the usual mould.
What new business owners use the money for
| Purpose | Examples |
|---|---|
| Setting up | Fit-out, signage, leasehold improvements, bond on a commercial lease |
| Buying a business | Purchase price, stock at valuation, handover costs |
| Equipment | Kitchen equipment, machinery, vehicles, tools |
| Stock | Opening inventory for retail or wholesale |
| Working capital | Wages and rent until revenue builds |
| Contracts | Materials and labour for a first large job |
Is it wise to secure a new business on your home?
It’s a real decision, and it deserves a real answer. Securing a start-up on your home means the home is at risk if the business can’t repay. Many successful New Zealand businesses started exactly this way, and plenty of owners have regretted it. Our guide to using home equity to save or start a business sets out the risks and rewards honestly.
A few things make it safer:
- Borrow for a plan, not a hope. Know what the money pays for and how revenue replaces it.
- Keep a buffer. New businesses almost always take longer to reach break-even than expected.
- Know your exit. Refinancing to a bank once there’s a trading history is the usual target.
- Involve your partner and family early, especially if they live in the house or are a co-owner.
Example scenario
Example scenario — for illustration only. An experienced chef in Queenstown wanted to buy a small café whose owners were retiring. With no trading history of her own, the bank declined. She and her partner owned an apartment in Frankton with a modest mortgage. A second mortgage over the apartment funded the purchase price, the stock at valuation and three months of working capital. The plan was to refinance with a bank after two years of accounts.
What we’ll ask
- What the business is, and your experience in the industry
- How much you need and what for
- The property available and what’s owing on it
- How you expect to repay: from trading, a later bank refinance, or a sale
No financials or tax returns are needed for the initial assessment.
Getting started
Tell us about the business you’re starting or buying, and the property available. Start an enquiry and a lending specialist will call to talk it through.