Small business loan: applying for business finance

If you’ve got a winning business idea that you believe will become profitable, you’ll need to access funding to match your passion for it. If you’re unsure how to finance your fledgling or growing business, a small business loan sits at the top of the list of choices.

If you lack the capital that comes from personal funds, business startup grants, or investment from third parties, your likely avenue will be to pursue a business loan. 

Time for a brief overview of the how and why of applying for a small business loan in New Zealand.

What is a business loan?

A business loan is a form of ‘debt financing’ and remains a popular funding avenue for aspiring and existing businesses.

A business loan comes in many guises. All will entail debt, interest, regular repayments, and varying levels of approval criteria.

Let’s look at the most popular types of small business loans or debt financing:

  • secured bank loan
  • unsecured bank loan
  • business credit cards
  • unsecured short-term loans
  • overdraft

How do you get a business loan in New Zealand?

How to get a business loan in New Zealand depends entirely upon your chosen financial institution, lender, or bank. With that said, there does remain a few core necessities that permeate almost every small business loan option. 

At the very least, it’s likely you need to conform to the following requirements:

  • You’ll need a good credit score with a history of paying loans back on time. Any major defaults or bankruptcies will be a serious barrier.
  • You’ll need a very solid business plan which outlines your pathway to profitability. It needs to be robust and fully detailed. It should also be reviewed by your accountant or business advisor prior to presenting to your proposed lender. If you require a dependable business plan template, we have one you can download for free.
  • Ideally, you should be unencumbered by any large debts that would interfere with your ability to pay back this business loan. Most business lenders will frown upon an overextended small business or sole trader with too many competing debts.
  • In the case of an existing business, you should be able to provide evidence of your profitability, cashflow, prospects, and stability. Accounting software reports and ‘profit and loss’ statements are very useful for this purpose.
  • If you seek a secured loan with a higher loan amount, you’ll of course need to prove ownership of assets such as vehicles, property, capital, or shares.

How much deposit do I need for a business loan?

While approval criteria will vary across different financial products, loan operators and loan amounts, having some form of collateral is advised. Many (but not all) lenders will be hesitant to grant funds to those without assets to offer up as loan security.

For example, a short-term business loan will usually be unsecured with low hurdles and no assets required.

While you don’t usually require a deposit, as with property, you may need to offer proof of asset ownership to access larger secured loans. Be sure you have the relevant documentation to prove ownership of assets before you apply for a small business loan.

What is the minimum credit score for a business loan?

In New Zealand, credit scores vary slightly depending on the institution that calculates them. Despite the slight variations, there’s a reasonably stable consensus on what constitutes a good or bad credit score.

Credit Score illion Equifax Centrix
Excellent 800 – 1000 833 – 1200 846 – 1000
Very good 700 – 799 726 – 832 769 – 845
Average 500 – 699 622 – 725 650 – 768
Fair 300 – 499 510 – 621 495 – 649
Low 0 – 299 0 – 509 0 – 494


Every New Zealand lender will balance your credit score against other factors when deciding whether to lend to you or not. There’s no firm rule for a minimum credit score, but it’s clear that higher is better. 

In many cases, you’ll have to apply for a small business loan before you know if your credit score will impact your eligibility.

If you would like to check your current credit score, use the NZ Government website here.

How long does a business loan take to get approved?

Some small business loans, especially short-term loans with financial institutions, can be approved extremely quickly. Sometimes you can gain approval in a matter of days from when you submit an application. 

If you’re seeking a large secured small business loan with a bank, you’ll find this timeline is extended significantly. 

The higher the amount and the more involved the application and approval process, the longer it will take. As you can imagine, checking your application, meeting with you, ascertaining your credit history and checking your assets will take time. 

That concludes our guide to small business loans. If you don’t qualify for small business grants or Maori business grants in New Zealand, or lack other funding options, a small business loan is a prime avenue to finance your venture. If you would like to investigate the other types of business funding, please see our article here.