The structures NZ businesses borrow under, explained .

Secured lending is consistently the cheapest, because the lender has a specific asset to recover against. Commercial property loans sit lowest at an indicative 7% to 11%, asset and equipment finance next at 8% to 16%, and unsecured term lending highest at 12% to 25%. The relevant comparison is not the cheapest product on the list but the cheapest product the business can actually access, which depends on what security is available.

A term loan is drawn once and repaid on a fixed schedule, with interest charged on the full amount from day one. A revolving facility, meaning a line of credit or an overdraft, can be drawn and repaid repeatedly across an access period, with interest charged only on the balance actually drawn. A term loan suits a one-off purchase; a revolving facility suits a gap that opens and closes with the trading cycle.

Not necessarily. Unsecured business lending is widely available in the NZ market from alternative lenders, typically at an indicative 12% to 25% and with a director personal guarantee close to universal. Security lowers the rate materially rather than being a precondition to borrowing, which is why the comparison worth running is what a secured alternative would cost rather than whether one is required.

Indicative ranges run from $5,000 at the smallest end to $20M or more on commercial property. Unsecured facilities commonly reach $250,000, asset finance $500,000 or more depending on the asset, and property lending is limited by the valuation and the loan-to-value ratio rather than by a product cap. The amount offered typically reflects turnover, trading history and security rather than the amount requested.

It varies by product more than by lender. Unsecured and short-term facilities from NZ alternative lenders are commonly assessed within one business day and settled the same or next day. Asset finance typically settles within two to seven days once a supplier quote is provided. Bank overdrafts and commercial property lending commonly take one to six weeks, because valuation, security documentation and registration all sit in the process.

On unsecured and most asset-secured business lending in New Zealand, a director guarantee is close to universal. On commercial property lending secured by a registered mortgage, guarantees are still common but the mortgage carries most of the recovery position. A guarantee is commonly unlimited and joint and several between directors, which is worth reading before signing rather than after.

Yes, though the field narrows. Several NZ alternative lenders assess from six months of trading and read bank transaction data rather than accounts. Major banks generally want two years of accounts. Asset finance is often more accessible to a young business than an unsecured term loan, because the asset does more of the work in the assessment than the trading history does.

Interest on borrowing used for business purposes is generally deductible against business income, subject to the accountant's confirmation on the specific position. Where a loan is partly for private purposes the interest is generally apportioned. GST treatment differs by product and by structure, particularly between a chattel mortgage and a lease, and is again a question for the accountant on the specific arrangement.