applying for a
Secured Business Loan NZ
Thinking about borrowing money to buy a business NZ? A secured business loan is a loan that uses an asset you own outright as security against the amount of funds you borrow. Security could be a vehicle you own outright, business assets, personal assets, chattels, property or a guarantor.
Secured loans generally come with lower interest rates than unsecured loans. They are also easier to obtain for borrowers with lower credit scores or less established credit histories. If you are starting a new business in New Zealand your loan will be secured as there is no financial history of the business for a lender to assess.
Some lenders will offer only secured loans and what they will accept as security will vary with each lender. To learn more about secured loans in NZ please read on below.
Compare Business Loans can assist you with a business loan for buying a business. There are a range of business loans from up to 10 lenders throughout New Zealand. If you are considering your secured business loan options you’re welcome to give us a call or arrange a callback on the button below and we can let you know what your options are, what you need to apply and which lender would be best for your business situatioNZ
Topics on this page:
- 1. What is the difference between secured and unsecured loans
- 2. How much can I borrow for a secured loan?
- 3. What can I use as security for a secured loan?
- 4. How do I know if a secured or unsecured loan is best for my business?
- 5. What will my interest rate be with a secured loan?
- 6. What can I use the funds for with a secured loan?
- 7. Using a business loan broker for a secured loan
1. What is the difference between secured and unsecured loans
A secured loan is where there is an asset included in the loan agreement that is used as collateral to minimise risk for the lender.
This means if or any reason your business is unable to repay your loan the asset can be repossessed and used to repay any debt owing to the lender.
An unsecured loan is where no security is involved and the amount you can borrow will be assessed on your business income and personal + business credit history.
2. How much can I borrow for a secured loan?
The amount you can borrow for a secured loan will depend on the value of the asset(s) and the overall health of your business.
In general you can borrow between 50%-75% of your asset(s) value. The amount will vary with each lender and take into account your income, expenses and personal/business credit history.
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Chat with us today and get a clear picture of what you’ll need to apply for a secured business loan. We can let you know what needs to be included in the loan application and what your potential loan amount will be.
3. What can I use as security for a secured loan?
The most commone forms of security for a secured loan are vehicles, equipment, chattels and property. Another form of security is a GSA, which is a General Security Agreement over your business and all business assets.
When using a vehicle as security you will need to provide asset details such as vehice make, model, year and value. How it works is the lender will become an interested party over your asset so that, in the event your business fails and you cannont meet your loan repayments, the lender can take your asset and sell it to get their money back.
4. How do I know if a secured or unsecured loan is best for my business?
An unsecured loan amount available to your business will be approx 10% of your annual income so if this amount is suitable for your needs then an unsecured loan could be ideal.
If 10% of your annual income is $20k ($200k annually) but you require $50k to purchase stock for your business then you would be best to consider a secured loan.
To apply for a secured loan you will need to decide whats asset(s) you are prepared to offer as security and calculate their total value. The asset(s) will need to be owned outright (excluding property) and you can loan approximately 70% of their value. If you have $100k in asset(s) you could loan up to $70k.
Unsecured loans are generally quicker to get approved and less documentation is required so your timeframe for funding can be a deciding factor whether unsecured or secured is the best option.
5. What will my interest rate be with a secured loan?
Interest rates for secured loans are usually better than unsecured because there is less risk for the lender. In New Zealand currently secured loans with non-bank lenders will start at 8.95%.
Your personal and business credit history will affect your interest rate as will the health of your business.
All lenders will offer different interest rates for secured loans so it is worth the time to research what each lender can offer and pick the best option for your business.
5 Minute Business Health Check
Complete a no-obligation, free business health check over a 5 minute phone call that includes:
- What kind of lending you should be applying for
- How much you will be eligible for
- Which lender would be the best option for your business situation.
6. What can I use the funds for with a secured loan?
Approved funds with a secured loan can be used for almost any reason as long as they are used for business purposes.
Purchasing a vehicle for your business, new stock or equipment, cashflow or working capital and more.
As long as your business is in good health a secured loan is less risk for a lender so approved funds can be used for a broad range of business needs.
5. Using a business loan broker for a secured loan
Because business loan brokers have existing relationships with secured loan lenders they will know what is required and who will offer the best interest rates. Lending criteria is different for each lender so a good business loan broker will know which lender suits your business situation the best, increasing your chances of approval.
If you are considering a secured business loan and want to know what your options are, feel free to contact Compare Business Loans and see what secured finance options are available to your business.
Business loan lenders in New Zealand
We are partnered with multiple business loan lenders throughout NZ. Each lender provides different types of business loans and will offer different rates for small business loans depending on your business’ financial situation and financial history.
Heres a few lenders we work with and their basic lending criteria.