A reference of the acronyms, structures, and regulatory terms that appear across NZ business lending paperwork. From AP and BCATS to PPSR and trust accounts, with NZ-specific framing throughout.
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Intro
NZ business lending sits at the intersection of credit law, tax law, banking practice, and industry-specific regulation. The terms borrowers see across loan documentation, IRD letters, lender websites, and accountant correspondence reflect that breadth. A standard small-business term loan from a major bank can reference the NZBN, the PPSR, GSA security, GST treatment, IRD provisional tax, Centrix credit reporting, and the CCCFA in a single document.
This glossary collects the terms most commonly encountered, with NZ-specific definitions. Each entry is short and decisional in style: what the term means, when it applies, and where it sits in the broader NZ regulatory or commercial framework. Definitions are class information only and are not advice on the application of a term to any particular business.
The glossary is grouped alphabetically across four sections: A to G, H to N, O to T, and U to Z. Cross-references to longer guide entries elsewhere on the site appear inline where the term has a dedicated treatment.
A to G
Acronyms and terms beginning with letters A through G.
A scheduled fixed-amount payment from a bank account to a payee. NZ lenders commonly require an AP set up on the borrower's primary trading account for business loan repayments. Distinct from a direct debit, which is initiated by the payee rather than the payer.
Lending where the asset being purchased (vehicle, equipment, machinery) provides the security. In NZ this is typically delivered as a chattel mortgage, hire purchase, or finance lease, registered on the PPSR.
Building, Construction and Allied Trades Skills, the NZQA qualification framework for trades. Mentioned on construction-industry lending applications where qualification status is checked alongside Licensed Building Practitioner registration.
A categorisation review of 6 to 12 months of bank statements separating business income, business expenses, and personal flows. The standard input to alternative-lender serviceability assessments in NZ.
Spending on long-lived assets (vehicles, plant, fit-out, IT) typically funded by debt rather than working capital. Capex finance differs structurally from working-capital finance in term and security profile.
The largest NZ credit bureau. Holds personal and commercial credit files, and reports defaults, arrears, judgments, and inquiries. NZ lenders pull a Centrix file as a standard part of business loan underwriting.
Asset-finance structure where the borrower owns the asset from day one and grants the lender a registered security interest under the PPSR. Common for commercial vehicles and equipment in NZ.
The interest rate at which a lender raises its own capital. The borrower's offered rate sits above the lender's COF by a margin reflecting credit risk, operating cost, and profit. Major-bank COF differs materially from alternative-lender COF.
Credit Contracts and Consumer Finance Act 2003. Consumer-credit law applying primarily to natural-person borrowing for personal use. Generally outside business lending, with edges around sole traders and personal guarantors. See the CCCFA guide for fuller treatment.
A mortgage secured against commercial property (office, retail, industrial). Distinct from a residential mortgage; pricing, term, and LVR conventions differ. Commercial mortgages sit outside CCCFA where the property is genuinely commercial.
A serviceability metric: net operating income divided by debt service (principal plus interest). NZ lenders commonly look for a DSCR of 1.25 to 1.5 on commercial property and asset-finance applications. Below 1.0 indicates the business does not generate enough income to cover the debt.
Cash withdrawn from a sole trader business or a partnership by the owner for personal use. Distinct from a salary in tax treatment. Tracked separately by the accountant for IR3 reporting.
A one-off fee charged at loan settlement, typically 1% to 4% of the loan amount or a flat dollar figure. Sits on top of the interest rate and forms part of the total cost of credit.
Financial Markets Conduct Act 2013. Sets fair-dealing rules for financial markets including bans on misleading conduct and unsubstantiated representations. Applies to content sites describing financial products as well as to product issuers.
Financial Services Legislation Amendment Act, the regime governing financial advice in NZ since 2021. Personalised regulated financial advice to retail clients requires a Financial Advice Provider licence; class information does not.
Financial Service Providers Act 2008 and the associated Financial Service Providers Register. Applies to entities providing financial services as defined; education-only sites are typically not in scope.
A lease that transfers substantially all the risks and rewards of ownership to the lessee. Treated as a purchase for accounting purposes; the lessee depreciates the asset and claims interest on the implicit lease finance, subject to the accountant's confirmation.
A historical term for a security interest over the changing pool of a company's assets. Replaced by the General Security Agreement framework following the Personal Property Securities Act 1999.
A temporary lender concession on payments where a borrower experiences hardship. May include payment holidays, interest-only periods, or term extensions. Distinct from CCCFA hardship variation, which applies only to consumer credit.
A security agreement granting the lender a security interest over all present and after-acquired property of the borrower. Registered on the PPSR. The standard security structure for NZ business term loans above modest amounts.
Goods and Services Tax. NZ rate is 15%. Compulsory registration applies above $60,000 turnover in any 12-month period. Registered businesses charge GST on sales and claim GST on purchases, returning the net amount to IRD. Specific GST treatment of any transaction is subject to the accountant's confirmation.
Asset purchase prices and loan amounts are quoted either GST-inclusive (the headline number includes GST) or GST-exclusive (GST is added on top). Asset-finance loans are commonly written for the GST-exclusive amount, with the GST recovered through the next GST return where the borrower is registered.
The intangible value of a business beyond its tangible assets, typically calculated as the excess of purchase price over net asset value. Bank lenders are typically reluctant to lend against goodwill alone; the borrower commonly funds the goodwill component from equity.
A person who guarantees a borrower's obligations under a loan. Personal guarantees from directors are common on NZ business lending. A guarantor steps into the borrower's shoes on default; their personal assets are exposed to the same extent.
H to N
Acronyms and terms beginning with letters H through N.
Asset-finance structure where the borrower hires the asset and acquires ownership at the end of the term following payment of all instalments. Differs from a chattel mortgage in the timing of legal ownership; commercially similar.
A statutory right under CCCFA section 55 allowing a consumer-credit borrower experiencing hardship to apply for variation of the contract. Does not apply to business loans outside CCCFA scope, where hardship is a contractual or commercial-workout matter.
A position where a person or company cannot pay debts as they fall due. NZ legal consequences differ for natural persons (bankruptcy under the Insolvency Act 2006) and companies (liquidation under the Companies Act 1993).
Earnings before interest and tax divided by interest expense. A serviceability ratio used alongside DSCR. NZ lenders typically look for an interest cover ratio of 2.0 to 3.0 on established trading businesses.
A loan structure where the borrower pays interest only for an agreed period, with principal repayment commencing later or sitting as a balloon at term end. Common on commercial property; less common on asset finance.
Inland Revenue Department, the NZ tax authority. Administers income tax, GST, PAYE, KiwiSaver, Working for Families, child support, student loans, and the use-of-money interest framework. Lenders cross-reference IRD-issued documents (IR3, IR4, GST returns) at application.
The personal income tax return filed annually by NZ individuals with non-PAYE income, including sole traders, contractors, and shareholders drawing dividends. Anchors lender serviceability assessment for sole-trader applications.
The company income tax return filed annually by NZ limited companies. Reports company taxable income; sits alongside the IR3 of any director or shareholder drawing personal income from the company.
Lending against unpaid customer invoices, advancing typically 70% to 90% of invoice value with the balance paid on customer settlement, less fees. Includes factoring (notification to debtors) and confidential invoice discounting (no notification).
NZ workplace retirement savings scheme. Employer and employee contributions are deducted via PAYE for employees; sole traders and self-employed contribute voluntarily. Visible on employer-side application documentation.
NZ regulatory licence administered by MBIE for builders carrying out Restricted Building Work. Mentioned on construction-industry lending applications where the borrower or contracted builder must be licensed.
A bank-issued instrument guaranteeing payment to a beneficiary on presentation of compliant documents. Used in NZ import-export trade finance to manage counterparty risk on cross-border transactions.
A revolving credit facility with an approved limit; the borrower draws and repays as needed and pays interest only on the drawn balance. Distinct from a term loan; functionally similar to a business overdraft with cleaner documentation.
Loan amount divided by the value of the security asset, expressed as a percentage. NZ commercial mortgages commonly sit at 60% to 70% LVR; residential investment LVRs follow Reserve Bank of NZ macroprudential settings.
The premium a lender charges above its cost of funds to deliver an interest rate to the borrower. Reflects credit risk, operating cost, and profit. Margins differ across products (asset finance, term loan, line of credit) and lender types.
Ministry of Business, Innovation and Employment. Administers NZ business policy including consumer protection law, tenancy, building regulation, and small-business support. Source of policy guidance on CCCFA and FMC Act matters.
A security interest over land registered on the title held by Land Information New Zealand (LINZ). Mortgages can be residential, commercial, or rural; the security framework is materially different from chattel security under PPSR.
The unique identifier for NZ businesses administered by MBIE. Issued automatically to companies and on application to sole traders, partnerships, and trusts. NZ lenders commonly require the NZBN at application.
New Zealand Bankers' Association, the industry body representing registered banks in NZ. Publishes guidance and code of practice; not a regulator.
New Zealand's Exchange, the registered stock exchange. Largely outside small-business lending; relevant only for borrowers with NZX-listed parent companies or seeking equity finance via NXT or NZX main board.
O to T
Acronyms and terms beginning with letters O through T.
The interest rate set by the Reserve Bank of NZ that anchors short-term wholesale rates. Movements in the OCR flow through to bank business lending rates with a lag, materially shaping rate cycles.
A lease under which the lessor retains substantially all the risks and rewards of ownership. The lessee treats lease payments as an operating expense rather than as a financed asset purchase. Common for vehicles in NZ corporate fleets.
A bank facility allowing the trading account to go into agreed negative balance. Charged at a margin above standard lending rates; designed to cover short-term timing gaps rather than structural funding.
A loan repayment structure where each instalment includes both principal reduction and interest. Most NZ business term loans amortise on a P&I basis over the contracted term.
A natural person's undertaking to be liable for a loan or contractual obligation in the event the principal borrower defaults. Standard on NZ company business loans where directors PG the company's obligations.
Pay As You Earn. The IRD-administered withholding regime for NZ employees' income tax and ACC earner levy. Visible to lenders on employer-side documentation; sole traders and contractors are typically outside PAYE.
Tangible business assets used in operations (machinery, fit-out, tools). Distinct from inventory (held for sale) and from property (separately financed). Plant and equipment typically secures asset finance via chattel mortgage or finance lease.
NZ's public register of security interests in personal property other than land. Established by the Personal Property Securities Act 1999. Lenders register chattel mortgages, GSAs, and finance leases on the PPSR to perfect their security.
Income tax payments made by IRD-registered taxpayers in instalments through the year, ahead of the final tax assessment. Typically paid in three instalments under the standard option. Cash-flow impact on small businesses is significant; lenders factor it into serviceability.
A general framework under which registered banks assess loans against capital adequacy, concentration, and risk-management requirements set by the Reserve Bank of NZ. Operates alongside CCCFA on the consumer side and the lender's commercial credit policy.
NZ's central bank. Sets the OCR, regulates registered banks via the Banking (Prudential Supervision) Act 1989, supervises non-bank deposit takers, and publishes lending and financial stability statistics.
Unpaid amounts owed to a business by customers. Provide the asset base for invoice finance and factoring. Listed on the balance sheet at face value less an allowance for doubtful debts.
Replacing an existing loan with a new loan, typically with a different lender or on different terms. Common reasons include rate improvement, term change, additional borrowing, or changing security structure. Triggers a fresh credit assessment.
NZ regulatory category under the Building Act 2004 covering structural work, weathertightness, and fire-safety items. Must be carried out or supervised by a Licensed Building Practitioner. Relevant to construction-industry borrowing.
NZTA-administered distance-based charges payable on diesel-powered vehicles in NZ. Replaces the fuel excise duty paid by petrol vehicles. A material operating cost for trucking and trades businesses; visible on serviceability assessments.
A loan where the lender holds a registered security interest over identified assets (chattel mortgage on equipment, GSA over business assets, mortgage over property). The lender can enforce against the security on default.
A lender's registered claim against an asset, granting the right to seize or sell the asset to satisfy the loan on default. Registered on PPSR for personal property and on the LINZ title for land.
The lender's assessment of whether the borrower's income can sustain the loan repayments. Calculated using DSCR, interest cover, debt-to-income, and bank-statement analysis. The single most important number in a credit assessment alongside security.
A balance sheet account tracking amounts owed between a NZ company and its shareholders. Balances move as shareholders contribute capital, draw funds, or receive dividends. Tax treatment is specific; subject to the accountant's confirmation.
A self-employed natural person operating a business in their own name. No separate legal entity; the trader is personally liable for all business debts. Income reports on the IR3. See the sole-trader guide for fuller treatment.
A tax on documents historically applied to loan and security documents. Abolished in NZ for most documents in 1999; the term occasionally appears in older lender documentation but no longer carries cost.
A fixed-amount loan repaid over an agreed term, typically on a P&I basis at a fixed or variable rate. The standard structure for NZ business borrowing above modest amounts. Distinct from revolving credit, asset finance, and invoice finance.
A bank account holding funds belonging to third parties, governed by professional trust account rules (legal, real estate, accountancy). Distinct from a business trading account; subject to specific audit and reporting requirements.
U to Z
Acronyms and terms beginning with letters U through Z.
A loan where the lender does not hold a registered security interest over identifiable assets. Pricing is materially higher than secured equivalents to compensate for the absence of security. NZ unsecured business lending is typically short-term and at moderate amounts.
IRD-charged interest on underpaid or late-paid tax. Rates are set by IRD and are typically materially above commercial lending rates. A material consideration in cash-flow planning around provisional tax.
An interest rate that moves over the loan term in response to a reference rate (typically the lender's base rate, which tracks OCR with a lag). Distinct from a fixed rate, which is locked for the contracted period.
Cash available to fund day-to-day operations, calculated as current assets less current liabilities. Working capital finance funds the gap between cash going out (suppliers, wages, rent) and cash coming in (customer payments). See the working capital reason page for fuller treatment.
A lender-led process to manage a distressed loan back to performance, typically through restructuring, additional security, forbearance, or partial recovery. Distinct from CCCFA hardship variation; commercial in nature.
A lender's accounting recognition that a loan is unrecoverable, removing the asset from the balance sheet. Does not extinguish the borrower's legal obligation; the lender or its agent can continue to pursue recovery.
The annual reporting cut-off for a business. NZ standard year-end is 31 March, aligning with the IRD tax year, though companies can adopt non-standard balance dates with IRD approval. Lenders commonly request statements as at year-end alongside management accounts.
A category of GST-able supply where the GST rate is 0% (typical examples include exports and certain financial services). The supplier still claims GST on inputs, producing a refund position. Specific GST treatment is subject to the accountant's confirmation.
The lender's formal credit assessment process. Combines automated risk scoring with manual review of bank statements, financials, security, and loan purpose. The output is an approval, decline, or conditional approval. Underwriting depth varies by amount, product, and lender type.
A reduction in pricing offered to borrowers placing larger or repeat business with a lender. Common on commercial banking relationships where deposit balances, transaction volume, and cross-sold products produce a relationship-pricing matrix that affects the offered rate.
A historical NZ government support payment to employers (most prominently during the 2020-2022 COVID-19 period) covering a portion of staff wages. Visible on bank statements from that period; lenders typically normalise serviceability assessments by adjusting for non-recurring subsidy income.
A contractual provision in some NZ business loan agreements treating default under one credit facility with the lender as default under all the lender's facilities to the borrower. Concentration risk on a single lender increases where x-default applies.
The effective return to the lender expressed as an annual percentage. Includes interest, fees, and timing effects. Differs from the headline interest rate where fees are substantial. Lenders manage portfolio yield rather than headline rate alone.
A contract amending the terms of an existing loan, typically used for term extensions, payment-holiday arrangements, or interest-only switches. Distinct from a refinance, which replaces the loan entirely. Variation typically preserves the original facility number, security, and credit history.
The lender's process of confirming the truth of statements made in the loan application. Common verification steps include IRD documentation cross-checks, employer confirmation, accountant references, supplier confirmation, and physical inspection of secured assets. The depth varies by amount and product.
Current assets divided by current liabilities. A measure of short-term liquidity. NZ lenders commonly look for a working capital ratio above 1.0 on businesses applying for term loan finance, with quick-ratio analysis tightening the test by excluding inventory.
Outro
The terms in this glossary appear unevenly across the borrowing journey. At application, the most-cited acronyms tend to be NZBN (identifying the business), IR3 or IR4 (anchoring income), GST (turnover threshold and registration status), and Centrix (credit file pull). The application form typically asks for the loan-purpose declaration relevant to CCCFA scope, the security on offer, and the requested term and amount.
During underwriting, the lender's analysis turns on serviceability metrics including DSCR and interest cover, supported by bank statement analysis and provisional tax payment patterns. The structuring choice between term loan, line of credit, asset finance via chattel mortgage or finance lease, and invoice finance reflects the loan purpose, the security on offer, and the borrower's preferences on cash flow shape.
At settlement, the documentation refers to the establishment fee, the AP set-up for repayment, the GSA or mortgage securing the loan, the PPSR or LINZ registration, and the personal guarantees from directors where applicable. Post-settlement, ongoing references include OCR-linked rate changes, refinance windows, GST returns affecting drawdown patterns on revolving facilities, and where applicable the workout or hardship pathways available if circumstances change.
This glossary is reviewed annually. Where a term changes meaning materially (typically in response to a regulatory amendment, a Reserve Bank of NZ macroprudential change, or an industry-practice shift), the entry is updated and the lastReviewed date refreshes. Specific applications of any term to a particular business are confirmed by the relevant lender, accountant, or registered adviser, not by this glossary.
References
Authority for IR3, IR4, GST, provisional tax, and use-of-money interest definitions.
Primary reference for PPSR, security interest, GSA, and chattel mortgage terms.
Statute reference for CCCFA, hardship variation, cooling-off, and consumer-credit definitions.
Authority for OCR, prudential lending, and registered-bank framework definitions.
Authority for NZBN definition and registration framework.
Authority for RUC definition and applicability.
Authority for LBP and Restricted Building Work definitions.
Reference for sole trader, company, partnership, and trust structure definitions.
FAQ
NZ business lending terminology reflects NZ-specific statutes (Personal Property Securities Act 1999, Credit Contracts and Consumer Finance Act 2003, Companies Act 1993) and NZ-specific regulators (Reserve Bank of NZ, Commerce Commission, Inland Revenue, MBIE). Some terms (LVR, DSCR, P&I) are international in usage; others (NZBN, RUC, BCATS, CCCFA) are NZ-specific in name and substance.
The application form typically references NZBN, IR3 or IR4, GST registration status, and the loan-purpose declaration. The credit assessment internal documentation references DSCR, interest cover, Centrix file results, and bank-statement turnover. The loan agreement at settlement references the establishment fee, AP for repayment, GSA or chattel mortgage security, PPSR registration, and any personal guarantees.
No. The glossary is class information only and is not personalised financial, legal, or tax advice. Specific applications of any term to a particular business depend on facts that the glossary cannot capture. The relevant lender, registered financial adviser, accountant, or solicitor is the right person to confirm the application of a term against an individual position.
The glossary is reviewed annually, with the lastReviewed date refreshed at each review. Where a term changes meaning materially in response to a regulatory amendment, a Reserve Bank of NZ macroprudential change, or a broader industry-practice shift, the entry is updated outside the annual cycle.
NZ rates move with the OCR cycle and the lender's commercial pricing. A glossary entry that quoted a rate would date quickly and would risk presenting historical figures as current. The companion guide on NZ business loan rates carries indicative bands with the relevant date stamp; the glossary defines the underlying term without committing to a number.
A chattel mortgage transfers asset ownership to the borrower from day one with the lender holding a registered security interest. A finance lease leaves legal ownership with the lessor; the lessee has full economic use and bears the residual risk and reward. NZ accounting treatment is broadly similar (both lead to depreciation by the user); GST timing differs, subject to the accountant's confirmation.
A General Security Agreement (GSA) grants a security interest over personal property (equipment, inventory, receivables, contractual rights) and is registered on the PPSR. A mortgage grants a security interest over land and is registered on the title held by Land Information New Zealand. Many NZ business loans combine both: a GSA over the business and a mortgage over the owner's property.
NZBN records are searchable free of charge on nzbn.govt.nz. PPSR registrations are searchable on ppsr.govt.nz (a small fee applies for some search types). Both registers are public. Lenders pull these searches as part of underwriting; borrowers can run their own searches before application to confirm the records are clean.
Related
NZ business loan rates 2026
Indicative rate bands for the products defined in this glossary.
Read onCCCFA and business loans
Fuller treatment of the consumer-credit terms cross-referenced in the glossary.
Read onSole traders and self-employed
How the IR3, GST, and CCCFA terms apply specifically to sole-trader borrowing.
Read onDisclaimer
A business loan is a commitment that runs for months or years, and repayments come out of the same operating cash flow as everything else. Before committing, it is worth modelling the weekly and monthly cost against the business's working-capital position, which is what this site is built to help with. Borrowing at a level that stays comfortable through a quiet quarter, not just a strong one, is widely regarded as the safer frame.
What this site is
A calculator and information tool. Not a lender, not a broker, not a registered financial adviser. Nothing here is personalised financial advice.
What the figures show
Modelled estimates based on the inputs you enter. Not a quote. Not an offer of credit. Not a guarantee of approval, rate, or fees.
What the lender decides
Final rates, fees, and approval are set by the lender after a CCCFA-appropriate assessment of the applicant's circumstances and credit decision.
Commercial disclosure
Businessloans.org.nz earns a commission from Prospa when a visitor applies through this site and their application is approved. The commission is paid by Prospa, not by the borrower, and it does not influence the rate Prospa offers. Full disclosure on the partner page.
Tax, GST, and accountant framing
Tax-treatment statements (GST claim timing, interest deductibility, depreciation rates) are general in nature and subject to your accountant's confirmation on the specific business position. For material amounts, professional advice from a registered financial adviser or chartered accountant is widely regarded as the safer frame.
