Quick answer
An unsecured business loan doesn't require property as security. In New Zealand, lenders size these loans mainly on turnover, bank statements and credit history, typically from $5,000 to $500,000 for trading businesses. Directors usually give personal guarantees, and some lenders register a general security over business assets. Unsecured loans are quicker and keep property out of it, but cost more per dollar, with shorter terms and more frequent repayments.
Key points
- No property security, but personal guarantees are almost always required.
- Typically $5,000 to $500,000, sized on turnover and bank statements.
- Faster and simpler than secured loans, but dearer per dollar.
- Check for general security agreements, frequent repayments and exit costs.
Not everyone comes to market with property in their bag. Plenty of good businesses rent their premises, own no real estate, or simply don’t want the family home tied to the business. For them, the unsecured shelf is the obvious place to browse. It’s convenient and quick, but the price tags are different, and so is the fine print.
What does “unsecured” actually mean?
It means the lender doesn’t take a mortgage or caveat over property. It doesn’t usually mean no security at all. Most unsecured business lenders still ask for:
- personal guarantees from directors, making them liable if the business can’t pay; and sometimes
- a general security interest over the business’s assets, registered on the Personal Property Securities Register.
business.govt.nz describes cash-flow loans as backed by your expected cash flow rather than your assets, which is a good way to think about this shelf. The lender is betting on the business continuing to trade.
How are unsecured loans sized?
Unsecured and cash-flow options for trading businesses are typically $5,000 to $500,000. Lenders usually decide the amount from:
| Factor | What they look for |
|---|---|
| Turnover | Monthly deposits, and how steady they are |
| Trading history | Usually at least several months, often longer |
| Cash buffers | Lowest balances each month; any overdrawn periods |
| Existing debt | Other lenders’ repayments visible on statements |
| Credit history | Directors’ and business credit files |
| Industry | Some sectors are seen as riskier |
Because bank statements tell so much of the story, our guide on how lenders read your bank statements is worth a read before you apply.
Who sells unsecured business loans?
You’ll find them on several stalls: online and fintech lenders, non-bank lenders, some finance companies and, for stronger businesses, banks. Online lenders tend to offer smaller, shorter loans with frequent repayments; non-banks and banks may go larger and longer for established businesses.
What does unsecured borrowing cost?
More per dollar than secured lending, because the lender has less to fall back on. Costs to collect when comparing:
- establishment or origination fees, often deducted from the loan;
- the total of scheduled repayments;
- any monthly or account fees;
- early repayment terms, which on some short loans include most of the remaining cost; and
- dishonour and default fees.
Turn these into the total cost of finance and cost per $1,000 borrowed using the offer comparer. Check the money in hand too: fees deducted at the start can leave you short of what you need.
If you’re weighing up unsecured versus using property, a quick, no-credit-check enquiry gets you a real person’s view of both.
What’s the repayment rhythm?
Unsecured loans are often repaid weekly or even daily, especially from online lenders. That suits businesses with daily takings, like cafes and retailers, and can squeeze businesses paid monthly or on long invoice terms. Before you accept, map the repayments against a few months of your actual cash flow. If there’s a week where the debit would bounce, choose a different structure or ask for monthly repayments.
What are the red flags on this shelf?
- Stacking: taking a second short-term loan to keep up with the first.
- Fees that swallow the advance: if money in hand is well below the loan amount, think twice.
- Unclear early repayment terms: ask for a dollar example.
- Guarantees you don’t understand: a personal guarantee can put your personal assets at risk; get advice.
- Guaranteed approval with no checks: a common scam line. See scams and red flags.
What does a sensible unsecured choice look like?
Illustrative example. A Wellington events company has a busy season coming and needs $60,000 for equipment hire deposits and extra staff. It rents its premises and the owners don’t want to use their home. One online lender offers six months with daily repayments; a non-bank lender offers twelve months with weekly repayments and a lower cost per $1,000. The events company is paid in lumps after each event, so daily debits would hurt in quiet weeks. It chooses the non-bank loan, after checking that early repayment costs are modest in case a big client pays early.
How do personal guarantees work on unsecured loans?
On this shelf, the personal guarantee is the lender’s main safety net, so it’s worth understanding exactly what you’re signing. A guarantee usually makes each director personally responsible for the business’s debt to that lender if the business doesn’t pay. Some guarantees are limited to a dollar amount; many are unlimited and cover costs and default charges too. Ask whether the guarantee covers only this loan or all money owed to the lender, and whether it can be released once the loan is repaid. Independent legal advice before signing is sensible, and some lenders insist on it.
When should you look at a different shelf?
If you need more than unsecured lenders will offer, want a lower cost per dollar, or need a longer term, property-secured lending is usually the alternative. If your need goes up and down month to month, a line of credit might fit better. If the gap is caused by customers paying slowly, invoice finance is worth a look.
Ready to browse the unsecured shelf?
Tell us what you need and how the business is trading. Enquiring doesn’t involve a credit check, and we don’t fling your details at every online lender; one real person looks at your situation and suggests the right option. Please be accurate about turnover and existing debts on the form, so the first suggestion is one you can actually get. See if you qualify.
Frequently asked questions
Is an unsecured business loan really unsecured?
It means no property is mortgaged. But most lenders still ask directors for personal guarantees, and some register a general security interest over business assets on the PPSR. Read the security section of the offer closely.
How much can I borrow unsecured?
Unsecured and cash-flow options for trading businesses are typically $5,000 to $500,000. The amount depends mainly on turnover, how steady it is, existing debts and credit history.
Can I get an unsecured business loan with bad credit?
Possibly, though it's harder without security. Some lenders look at recent trading more than old credit issues. Bad credit is considered case by case, and being upfront helps match you to the right lender.
How quickly can an unsecured loan be arranged?
Often faster than secured loans because there's no valuation or property legal work. Speed depends on the lender and how quickly you provide bank statements and ID.