Quick answer
Before taking a business loan in New Zealand, ask the lender: how much will I actually receive; what's the total I'll repay including every fee; what security and guarantees do you need; how often are repayments; what does it cost to repay early; what counts as a default and what does that cost; are there covenants or reporting conditions; and who are you, including your registration. Get the answers in writing and compare them across lenders.
Key points
- Ask about money in hand, total repayable and every fee, in dollars.
- Pin down security, guarantees, repayment rhythm and early exit costs.
- Ask what triggers a default and what it costs.
- Check who the lender is before you hand over documents.
Good market shoppers ask questions. Where’s it from? How fresh is it? Is there a better one out the back? Borrowing deserves the same curiosity, because the answers to a handful of plain questions tell you more about a loan than any brochure. Print this page, take it to every lender conversation, and write the answers down.
What will this loan really cost me?
Start with money, in dollars:
- How much will I actually receive after any fees taken out at settlement?
- What’s the total of all repayments if I stick to the schedule?
- What fees apply? Establishment, broker, legal, valuation, documentation, monthly or annual account fees, line fees, PPSR registration. Which are included in the repayments and which are extra?
- Is any interest prepaid or capitalised? Prepaid interest reduces your money in hand; capitalised interest grows the debt.
- Can pricing change during the term, and if so, how and when?
With those answers you can work out the total cost of finance and the cost per $1,000 borrowed. Our total cost page shows how, and the offer comparer does it for you.
What are you asking me to put on the line?
Security and guarantees are where the real risk sits.
- What security do you need? A specific asset, a general security agreement over the business, a mortgage or caveat over property?
- Whose property? The business’s, a director’s home, a family trust’s?
- Who has to guarantee the loan? Directors only, or spouses and trustees too?
- Is the guarantee limited to a dollar amount, or unlimited?
- Will you register on the PPSR, and over what exactly?
If a lender wants far more security than the loan seems to justify, ask why. Often there’s room to negotiate, which our negotiation guide covers.
How will repayments work?
- How often are repayments taken? Daily, weekly, fortnightly or monthly?
- Is there a balloon or lump sum at the end?
- Are there interest-only periods, and what happens after them?
- Can I make extra repayments without a fee?
- Can I redraw or top up later if I need to?
Match the rhythm to how your cash comes in. A daily debit suits a busy takeaway; it can strangle a building firm paid monthly.
Midway through this list and already sensing the lender is a poor fit? You can ask us for a better-matched option without a credit check.
What happens if my plans change?
- What does it cost to repay early at month 6, month 12, or halfway through the term? Ask for a dollar example.
- Can I sell the asset or property securing the loan, and what’s the process?
- What if I want to refinance to a bank later?
Our page on early repayment and exit costs explains the common fee types.
What happens if things go wrong?
Nobody borrows expecting trouble, but your questions should cover it:
- What counts as a default? A late payment, a breach of covenant, a new IRD debt, a change of director?
- What does default cost? Default interest, fees, recovery costs?
- How much notice do you give before taking action?
- Are there covenants or reporting requirements, such as quarterly accounts or minimum cash balances?
- Will you talk to me first if I’m struggling?
The Companies Office reminds directors not to agree to obligations the company won’t be able to meet. Understanding the downside isn’t pessimism; it’s part of a director’s job.
What will you need from me, and how long will it take?
Two practical questions save a lot of frustration. First, ask for the full document list upfront, so you can gather everything in one go rather than drip-feeding it over weeks. Second, ask for a realistic timeline from application to money in the bank, including valuations, legal work and any approvals from your existing lenders. Then ask what usually causes delays. Knowing that a valuation typically takes a week, or that a second-mortgage consent can slow things down, lets you plan around it.
Who exactly are you?
Finally, ask about the lender itself, especially if you found it online:
- What’s your full legal name and NZBN?
- Are you on the Financial Service Providers Register? You can search it by name, FSP number or NZBN.
- How long have you been lending to businesses like mine?
- Will anyone else see my information, such as other lenders, brokers or data buyers?
- What’s your complaints process?
A lender that answers these clearly is showing you how it’ll behave as a partner. One that dodges them, or asks for an upfront fee before giving you a written offer, belongs on our red flags list.
How should you record the answers?
Use the same sheet for every lender so you can compare quickly. Here’s a simple layout:
| Question | Lender 1 | Lender 2 | Lender 3 |
|---|---|---|---|
| Money in hand | |||
| Total repayable (all fees) | |||
| Security and guarantees | |||
| Repayment frequency | |||
| Early repayment cost (dollar example) | |||
| Default triggers and costs | |||
| Covenants or reporting | |||
| Registration checked? |
Illustrative example. A Palmerston North physiotherapy practice asked two lenders these questions about a $60,000 fit-out loan. One lender’s answers revealed a general security agreement over all practice assets and an early repayment charge equal to the remaining interest. The other took security over the fit-out equipment only and charged a small fixed exit fee. On paper the first was slightly cheaper; after the questions, the owners chose the second.
Want a lender who answers these upfront?
When you enquire with us, a real person talks you through these exact questions before anything is signed. Asking costs nothing and doesn’t touch your credit file, and we don’t pass your details to a crowd of lenders. Please give accurate figures on the form so the answers we come back with fit your business. See if you qualify.
Frequently asked questions
What's the single most important question to ask a lender?
What's the total amount I'll repay, including every fee, if I keep to the schedule? It forces every cost into one dollar figure you can compare.
Should I ask lenders about their criteria before applying?
Yes. Asking what they typically require, such as trading history, security and documents, helps you avoid applications that are likely to be declined and recorded on your credit file.
Is it rude to ask a lender how they're funded or regulated?
Not at all. It's a sensible question. Licensed deposit takers are supervised by the Reserve Bank, and providers of financial services are generally expected to be on the Financial Service Providers Register. A professional lender will answer readily.
Should I get answers in writing?
Yes, especially for costs, early repayment terms and conditions. Verbal assurances are easy to misremember and hard to rely on later.