Quick answer
Going straight to your bank suits simple deals that fit bank policy, where you have time and a good banking relationship. A business finance broker suits complex, urgent or previously declined deals, or owners who want access to non-bank and private lenders without applying everywhere. Brokers may be paid by lenders, by you, or both, so ask in writing. Either way, compare the final offers on total dollars, security and exit costs.
Key points
- Direct to the bank: simplest for clean, standard, unhurried deals.
- Broker: wider choice, packaging and negotiation for harder or urgent deals.
- Ask any broker exactly how they're paid, in dollars, before you start.
- Both routes should end with a written offer you compare on total cost.
There are two ways to shop a market. You can walk every aisle yourself, or you can send someone who knows the place. Business borrowing is the same: go straight to your bank, or use a broker who works across many lenders. Neither is always right. Here’s how to decide.
What are you really choosing between?
Going direct means you deal with one lender at a time. You tell your story, gather documents, and if the answer is no, you start again somewhere else. Using a broker means one person learns your story, picks the lenders most likely to say yes and presents the application for you.
business.govt.nz’s guidance on borrowing encourages owners to research loan types, compare lenders and build relationships with bank staff before they need money. Both routes can do that. The difference is who does the legwork, and how much of the market you can see.
How do the two routes compare?
| Factor | Direct to your bank | Through a broker |
|---|---|---|
| Choice | One lender’s products | Banks, non-banks, private lenders and specialists |
| Your time | You prepare and chase | Broker packages and chases |
| Fit for clean, simple deals | Excellent | Good, but may be more than you need |
| Fit for complex or declined deals | Limited | Strong, if the broker knows the market |
| Cost to you | Lender fees only | Lender fees, plus a broker fee if charged |
| Credit file | One enquiry per application | Fewer if the broker targets well; more if they spray |
| Negotiation | You, with one lender’s offer | Broker, often with competing offers |
When does going direct win?
Your bank is often the best first stop when:
- the business has two or more years of solid financial statements;
- your credit file and IRD account are clean;
- you’re borrowing for a standard purpose the bank understands;
- you’ve got property or strong business assets to offer as security; and
- there’s time for the bank’s process to run.
In that situation, a conversation with your business banker costs nothing and may produce the cheapest offer in the market. Our page on the main banks explains what they look for.
When does a broker win?
A broker tends to be worth it when:
- the bank has already declined, or gone quiet;
- you need a decision quickly;
- the deal has a wrinkle: short trading history, past credit issues, IRD debt, an unusual property or a lumpy income pattern;
- you’d like access to non-bank and private lenders without researching each one; or
- you simply don’t have time to run the process yourself.
A good broker also protects your credit file by applying in the right place first, instead of letting you try five lenders in a fortnight. Consumer protection guidance in New Zealand notes that many credit checks in a short time can count against you.
Not sure which route your deal needs? Ask us with a 60-second enquiry. We’ll tell you honestly if your bank is the best place to start.
What does a broker cost compared with going direct?
Brokers are paid in one of three ways: a commission from the lender, a fee from you, or both. A commission doesn’t come out of your pocket directly, but ask whether it differs between lenders, because that could influence advice. A broker fee is a real cost and belongs in your comparison. When you put offers into the offer comparer, add any broker fee to the upfront costs so you compare like with like.
What should you ask before choosing a broker?
- How are you paid on my deal, and how much?
- Which lenders do you use, and which would you approach for me?
- Will you ask before sending my details to each lender?
- Which of your steps involve a credit check?
- Are you registered on the Financial Service Providers Register?
You can search the register yourself by name or NZBN. A broker who’s evasive about fees or process is one to skip. Our page on business finance brokers covers this stall in full, and questions to ask a lender has a printable list you can use with either route.
Can you do both?
Yes, and many owners do. A common pattern is to talk to your own bank directly, and in parallel ask a broker to look at the rest of the market. The rules for doing this well are simple: tell each party what the other is doing, don’t let both submit formal applications to the same lender, and compare the final offers on the same dollar basis.
Illustrative example. A Dunedin cafe owner wants $70,000 to add a second site. The bank is interested but needs updated accounts that won’t be ready for six weeks. A broker finds a non-bank lender willing to decide on recent bank statements, at a higher cost and with a modest early repayment fee. The owner takes the non-bank loan to secure the lease, then refinances to the bank once the accounts are done, having checked that the exit fee was small enough to make the plan worthwhile.
Which way should you shop?
If your deal is simple and your bank is keen, go direct. If your deal is complicated, urgent or has already been knocked back, a broker who knows the wider market can save time and protect your credit file. Either way, get offers in writing and compare dollars, not slogans.
If you’d like a real person to tell you which way to go, tell us about the business. There’s no credit check when you enquire, your details aren’t sprayed across the market, and we’ll talk it through before anything goes to a lender. Fill in the form accurately so our first suggestion is a good one. Start your enquiry.
Frequently asked questions
Is it cheaper to go direct to the bank?
Sometimes. If your deal fits the bank's policy and there's no broker fee, going direct can be the lowest-cost route. But a broker may find a lender with sharper terms or fewer conditions, and many brokers are paid by the lender rather than by you.
Can a broker deal with my own bank for me?
Many brokers work with banks as well as non-bank lenders. Some owners prefer to handle their main bank directly and use a broker for the rest of the market. Tell the broker which lenders you've already approached so they don't duplicate applications.
Will using a broker affect my relationship with my bank?
Not usually. Banks are used to receiving applications through brokers. If you want to keep your everyday banking where it is and borrow elsewhere, that's common and generally fine, though check whether your existing facilities have any restrictions.
What if my bank already declined me?
That's when a broker can earn their keep, by understanding why the bank said no and finding a lender whose criteria fit better. Tell them exactly what the bank said.