Top 10 questions to ask when getting a business loan

Top 10 questions to ask when getting a business loan
Before you apply for a business loan, it is important to ask the lender the right questions to make sure you are getting the right loan and the right lender for your business.

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How much money can my business borrow?

Every lender has a minimum and maximum amount they will lend to a business. When the lender assesses your business they will determine the servicing ability of the business which is basically what the business can afford to borrow and still operate comfortably. The type of loan will also determine how much your business can borrow. If you are applying for an unsecured loan the amount your business can borrow will be based on your revenue and credit history. If you’re running at a loss some months the amount will be less than if your are in profit every month.

The amount you can borrow unsecured will be calculated at about 10% of your business revenue.

A secured loan amount will be assessed on the security available you are using as collateral against the loan. You can usually borrow 60-80% of the asset(s) value. Your income will also be assessed, as will your credit history.

How long will the business loan application take?

For an unsecured business loan you can receive funds in 24 hours if all the correct information is supplied to the lender and there are no additional requirements during assessment.

A secured loan is a bit more involved, assessing the security and providing proof of ownership. If you are using multiple assets this can take time to work through to determine the total value and what amount you can lend off it. A secured loan could be complete in 24 hours however is more likely to take 48 hours or longer.

What do I need to apply for a business loan?

Every lender will require different information for your business assessment, and it will depend on the type of loan you are applying for too. All lenders will require photo ID, bank statements and a signed authorisation to assess your business and perform a credit check. Additional requirements may include a statement of position, business financial reports, proof of ownership (property, assets), mortgage statements (property security), quotes on vehicles or equipment (asset finance), work contracts (startups, vehicle finance) or sale agreements (buying a business).

Considering if a business loan is the right option for your business? Start a conversation with Compare Business loans today. We can let you know what funding options are available to your business, how much you can loan and which lender to apply with. Contact us today

Will you check my credit score?

Yes a lender will check both your personal credit history and your business credit history. You can get reports online before applying if you want to check for any outstanding debt or even errors which may be logged on your credit history. You can check your credit report online in New Zealand on websites such as Credit Simple or Centrix. Checking your score is free and worthwhile so you can make sure it is looking as good as possible before applying.

What is the interest rate on a business loan?

Your interest rate you receive will depend on the overall health of your business and your credit history (business and personal). All lenders will have different minimum and maximum interest rates so it is a good idea to do your research before applying to find a suitable lender who offers good interest rates.

Your buisness loan interest rate for a secured loan will usually be better than an unsecured loan because there is less risk for the lender so this is something to think about when deciding which type of loan is right for your business.

Can I apply for my business loan online?

Yes most business loan applications are completed online and can take only 10 minutes if applying for an unsecured loan and you have everything you need with you to complete the application.

How long is the term of the business loan?

The term of the loan is important because it can affect the total amount you repay and also the installment amounts weekly, fortnightly or monthly. See what options there are with your lender for the length of your long and decide which is best for you. Higher repayments with a shorter term? Or lower repayments over a longer term?

What if I want to pay off my business loan early?

Some lenders will allow you to pay off your loan early, some will charge a set fee and some will calculate a fee based on the remaining amount owing. You can check with your lender whether they charge early repayment fees and find one that does not charge a fee if that is what you prefer.

What are the fees for a business loan?

Lenders will charge various fees in your business loan including an establishment fee, referral or broker fee, admin fee, property caveat fee, insurance fee, late payment fee and more. Always review all fees in your loan agreement before signing so you know exaactly what you will be charged in any situation that may arise.

Will my business loan require a guarantor?

Most business loans will include a personal guarantee for all business owners/share holders. If you are applying for a secured loan and have limited security, a guarantor can be included for additional security and may be the difference between an approval or a decline. It is important to take your time if considering using a guarantor as it means they are liable legally to repay your loan should your business not be able to meet repayments. This can cause conflict between friends, family etc.

Well-known banking institutions, like Santander, are guided by federal regulations and provide banking products that adhere to the highest quality standards. However, not all lenders have an eye to your financial security. Throughout the process of shopping for a personal loan, watch out for the following warning signs of predatory lenders:

  • No-credit-check loans
  • Unclear fees and hidden costs
  • High-pressure sign-up processes

If you’re feeling pressured to apply for a loan, the fees aren’t spelled out in your contract, or your lender makes promises that seem too good to be true, you may be dealing with a predatory lender.

After reviewing these questions to ask before getting a loan, you may decide a personal loan is right for you. At Santander, we make it easy, with a discount for automatic deduction from your Santander checking account, no application fees, and no collateral required. Apply for a personal loan today.

If you are considering a business loan, start a conversation about your borrowing options with Compare Business Loans today.

Business Loan NZ Quick Links

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How much money can your business borrow?

Start a conversation with Compare Business Loans today to see how much funding your business is eligible for

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.

Get capital small business loans

Fast flexible business finance

• Loans from $5000
• Minimum 9 months trading
• Unsecured to $50k
• 10k or more monthly revenue
• Cashflow, asset, equipment finance

Heartland bank small business loans

Give your business a boost

• Unsecured up to $100k
• Terms up to 5 years
• Secured loans available
• No early repayment fees
• Interest rates from 11%

Fundtap invoice finance nz

Invoice Finance

• 100% online
• Loan off your outstanding invoices
•Funds in 24hrs
• Fast source of cashflow
• Use it when you need it

Pioneer Finance NZ

Your loan, tailored to you

• 100% online application
• Loan terms up to 7 years
• Secured finance
• Finance up to $100k
• Business finance for any reason

efco small business finance nz

We Finance Dreams

• 100% online
• From 8.95%
•Decision in 24hrs
• Startup business loans
• Vehicle finance, asset finance, cashflow loans

Speirs Finance NZ

The kiwi owned team growing kiwi businesses

• Truck Finance
• Repayment up to 5 years
• Heavy Machinery Finance
• 2nd hand asset finance
• Equity Release

Partner with Compare Business Loans Today

As a business loan broker, we are essentially an extension of your business. When you work with us, we do all the hard work for you by preparing your application and matching you with an NZ lender most likely to approve your business loan application. Get Started Now!

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