How NZ business lenders separate secured from unsecured credit, the indicative rate gap typically observed between them, and where each structure fits across asset purchase, working capital, and growth funding.
Indicative only. Why we say this
Quick answer
Side-by-side
The structural differences below drive most of the pricing, term, and amount differences observed across the NZ business-lending market. The right side is widely the unsecured end of the alternative-lender book; the left side is widely the secured end of the major-bank or specialist book.
| Feature | Secured | Unsecured |
|---|---|---|
| Specific asset charge | Yes (GSA, mortgage, or PPSR) | No |
| Personal guarantee | Common, alongside the asset charge | Almost always |
| Indicative rate band | 7% to 13% widely observed | 12% to 28% widely observed |
| Typical amount range | $50K to $5M+ | $10K to $500K |
| Typical term | 3 to 7 years | 6 to 36 months |
| Repayment structure | P&I, sometimes IO | P&I, sometimes daily or weekly |
| Decision timing | Days to weeks (asset valuation) | Hours to days (data-driven) |
| Default recovery path | Repossession or asset sale | Court action against guarantor |
| Best fit | Asset purchase, refinance, capex | Short-term working capital |
Indicative bands only. Actual rates, amounts, and terms depend on the lender's assessment of the specific application.
How security works in NZ
Secured business lending in NZ runs on a small set of legal mechanisms. Each one is widely used, and most secured loans use more than one. Understanding which element applies to a specific loan is the first step in reading the contract well.
01
A GSA is a contract granting the lender a security interest in present and after-acquired property of the business. It is the broadest charge typically used, and is registered on the PPSR. A GSA covers stock, plant, debtors, and other business assets without naming each one individually.
02
A specific-asset registration on the Personal Property Securities Register names the asset, commonly a vehicle, machine, or piece of plant. The lender's priority is established by the registration date. Asset finance products almost always carry a specific-asset PPSR registration.
03
A registered mortgage over residential, commercial, or rural property gives the lender a charge on the title. Property-secured business lending typically prices at the lowest end of the secured rate band because property is a deep, liquid security in the NZ market.
04
A personal guarantee is widely required even on secured loans. It is a contract under which the director becomes personally liable for the loan if the company cannot pay. The guarantee runs alongside the asset charge, not instead of it.
05
Cross-collateralisation is the practice of using one asset to secure more than one loan, or one loan to be secured by more than one asset. It commonly arises where a business has an existing GSA with a bank and takes a second facility from the same bank.
06
A negative pledge is a contractual undertaking not to grant security to another lender without the existing lender's consent. It is common on larger unsecured facilities and on secured facilities where the lender wants to preserve its priority position.
Deep dive
Secured
A secured business loan attaches a specific legal charge to one or more business assets. The most common forms in NZ are a General Security Agreement, a registered property mortgage, and a specific-asset PPSR registration. The charge is registered on a public register, which establishes the lender's priority against any later claim on the same asset.
Pricing on secured loans sits at the lower end of the NZ business-lending market. Indicative bands commonly run from around 7% on property-secured commercial mortgages, through 9% to 11% on chattel-mortgage asset finance, to 11% to 13% on GSA-secured term loans for established businesses. The pricing reflects the lender's recovery position: if the borrower defaults, the lender has a defined path to recover the loan from the asset.
Amount and term are typically larger and longer. A secured term loan in the $250K to $2M range over 5 to 7 years is widely available across the NZ major-bank and specialist-lender book. The lender's assessment focuses heavily on the asset valuation, the borrower's servicing capacity, and the directors' net position, in roughly that order.
Unsecured
An unsecured business loan carries no specific charge against a business asset. There is no PPSR-registered claim on stock, plant, or debtors, and no property mortgage. What there almost always is, on NZ unsecured business lending, is a personal guarantee from the directors. The PG is enforceable separately from the company's obligations.
Pricing on unsecured loans sits at the higher end of the market. Indicative bands commonly run from around 12% on bank-issued small-business unsecured loans, through 14% to 22% on alternative-lender term loans, to 20% to 28% on the smallest and shortest-term unsecured facilities. The pricing reflects the lender's recovery position: if the borrower defaults, the lender's only path is a money judgment against the guarantor.
Amount and term are typically smaller and shorter. An unsecured term loan in the $25K to $200K range over 6 to 36 months covers most of the NZ alternative-lender book. The lender's assessment focuses heavily on cash-flow data (often via accounting-software integration or bank-statement scraping), the credit file, and the directors' personal credit position.
Context
The secured-versus-unsecured divide is older than the modern alternative-lending market, but the split sharpened materially in NZ from around 2015 onwards. Before that, most non-bank business lending sat in specialist asset-finance companies (chattel mortgages on vehicles and plant), and most unsecured lending was either credit cards or bank overdrafts. The arrival of data-driven alternative lenders (UDC, Heartland, Prospa, and others) created a genuinely new product: a fast, fixed-term, unsecured term loan in the $25K to $250K range, priced well above bank lending but available to borrowers who could not clear a bank application.
The legal framework underneath both products is largely the same. The Personal Property Securities Act 1999 governs how security interests in personal property are created, registered, and enforced. The Companies Act 1993 sets the directors' personal liability framework that personal guarantees draw on. The Property Law Act 2007 governs mortgages over land. None of this is bespoke to alternative lending; the alternative-lender product is a new commercial offering on top of an established legal framework.
The Reserve Bank of NZ's prudential regulation of registered banks means bank-issued unsecured business lending is constrained in ways that alternative-lender unsecured lending is not. This is a significant part of why the alternative-lender unsecured product exists at all: there is borrower demand for fast, flexible, unsecured credit that the major-bank book is not structured to meet. The price gap is the cost of access.
A common misconception is that "unsecured" means "the director has no exposure". The personal guarantee almost always attached to NZ unsecured business lending creates real exposure on the directors' personal balance sheet. A PG is enforceable through the courts; a director who signs a $150K PG and the company cannot pay is, in practice, personally liable for $150K plus interest and costs. The right way to think about this is that "unsecured" describes the company's position, not the directors' position.
Lender appetite
Different lender categories specialise differently. The table below summarises the widely observed appetite of each category across secured and unsecured business lending in the NZ market. The bands are indicative observations only, not lender-specific quotes.
| Lender category | Secured appetite | Unsecured appetite | Typical amount range |
|---|---|---|---|
| Major banks (ANZ, ASB, BNZ, Westpac, Kiwibank) | Strong, especially property-secured | Limited, mostly small-business overdrafts | $50K to $10M+ |
| Specialist asset-finance (UDC, Custom Fleet, Yoogo) | Strong, asset-specific only | Generally not offered | $20K to $2M |
| Heartland Bank | Strong (livestock, asset, motor) | Online unsecured up to $250K | $10K to $1M |
| Alternative lenders (Prospa, Lumi, Bizcap) | Limited, some product-specific | Strong, core business | $10K to $500K |
| Invoice finance specialists (Apricity, FundTap) | Secured against debtors only | Generally not offered | $25K to $5M (against debtors) |
| Commercial mortgage lenders | Property-secured only | Generally not offered | $250K to $20M+ |
Lender categories vary year to year as products are introduced or withdrawn. The appetite descriptions are widely observed positions, not formal lender statements.
Worked scenarios
Each scenario below illustrates how the structural choice between secured and unsecured plays out in a specific NZ context. Figures are indicative only and depend on the lender's assessment.
Established North Island freight business, 6 years trading, 4 trucks already in fleet, considering a fifth.
A specific-asset chattel mortgage from a specialist asset-finance lender is the widely chosen structure for a fifth-truck purchase in this scenario. The truck itself secures the loan, registered on the PPSR. Indicative pricing in the 9% to 12% band is widely observed for an established operator with this profile, over a 5-year term.
An unsecured term loan for $180K is theoretically available from an alternative lender, but the indicative pricing would land in the 16% to 22% band over a shorter term. The total cost of credit difference over 5 years is widely observed to be in the $40K to $60K range. The chattel mortgage is the structurally cheaper product because the truck is a recoverable asset.
Indicative figures
Established Riccarton cafe, 4 years trading, $750K turnover, owners do not own property and the major bank has already declined an overdraft increase.
A short-term unsecured loan from an alternative lender is the widely chosen structure for a 6-week cash-flow gap of this size. The cafe has no qualifying security to offer (the espresso machine is already on a lease, the leasehold improvements are not transferable). An asset-finance product cannot be used because there is no asset to finance.
Indicative pricing for $40K unsecured over 12 months from an alternative lender lands in the 18% to 24% band, which is widely observed to be expensive in absolute terms but reasonable for the use case. The total interest cost over 12 months is widely observed at around $4K to $5K. A bank overdraft, if available, would price meaningfully lower; the unsecured product exists because the bank product is not available.
Indicative figures
Profitable SaaS business in Parnell, 3 years trading, $1.4M ARR, growing 40% year-on-year, founders rent rather than own.
The structural choice is harder in this scenario. There is no asset to secure: the business is intangible, the office is leased, the founders do not own property. A property mortgage is not available without family support. A GSA over the company's present and after-acquired property is theoretically available but the assets behind the GSA (debtors, IP, cash) are typically considered weak security in a software business.
A widely observed structure is a $200K unsecured term loan from a bank or alternative lender on a 36-month term, plus a $100K invoice finance facility against the debtor book. Indicative pricing on the unsecured term loan lands in the 13% to 18% band; the invoice finance facility prices against the debtor quality, commonly 1% to 2.5% per invoice month. The blended cost of capital is meaningfully higher than a property-secured equivalent would be, which is the structural reality of unsecured growth funding.
Indicative figures
Pitfalls
Each item below is a widely observed misconception in the NZ business-borrowing market. None are universal, but each one comes up repeatedly in practice.
Unsecured business lending in NZ is almost always backed by a director personal guarantee. The company's assets are not at risk in the same way, but the director's personal balance sheet is. A $200K PG is, in practice, a $200K personal liability if the company cannot pay.
A GSA registered later sits behind an earlier GSA in the priority queue. A business that takes a second secured facility from a different lender without releasing or subordinating the first GSA may find the second lender refusing the loan or pricing it as effectively unsecured. The PPSR search is the first step in any second secured facility.
Some borrowers choose unsecured pricing to avoid registering a GSA, on the basis that "free assets" preserve future borrowing options. The arithmetic rarely supports this. The 5 to 10 percentage-point rate gap typically swamps any future-flexibility benefit unless the borrower has a specific second facility in active planning.
A PPSR registration is a notice of security interest, not a record of payment behaviour. A cleared loan that has been paid off but not removed from the PPSR is a common cause of confusion. PPSR records are managed separately from credit-bureau records (Centrix, Equifax, illion).
Default on a secured loan can move quickly. Repossession of a chattel-mortgaged truck can occur within weeks of default, depending on the contract. Property mortgagee sale follows a longer regulated process but the outcome is the same: the asset is sold to recover the debt, and any deficiency is pursued against the guarantor.
NZ alternative lenders enforce personal guarantees as a routine part of their default process. The widely observed sequence is: company default, demand on the company, demand on the guarantor, statutory demand, court action for money judgment. The full sequence commonly runs 4 to 9 months from first default.
Decision sequence
01
A complete inventory of business assets (vehicles, plant, equipment, stock, debtors), property (residential, commercial, rural), and any existing PPSR registrations is the first step. Many businesses overestimate the security they have available, particularly where existing leases or asset-finance contracts already attach charges.
02
A specific asset purchase points strongly to asset-specific secured lending. A general working-capital need points to unsecured or invoice finance. A long-term capex programme points to GSA-secured or property-secured term lending. The structure follows the purpose, not the other way around.
03
A secured 8% loan over 5 years and an unsecured 16% loan over 2 years can produce surprisingly similar total interest because the unsecured loan amortises faster. The right comparison is total cost of credit (interest plus fees) over the actual term, not the headline rate alone. The calculator below illustrates this directly.
Test the maths
The calculator below pre-fills $150K over 60 months at an indicative 11.5% rate, which sits between typical secured and unsecured pricing for a mid-sized term loan. Adjusting the rate up to ~16% and down to ~8% illustrates the cost gap between an unsecured and a secured equivalent on the same loan amount and term.
Indicative repayment
Weekly
$761/week
Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.
Sending to Prospa
5 years at 11.50%. Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
Methodology
The indicative rate bands in this guide draw on publicly observable pricing on NZ lender websites at the time of last review, plus widely observed market positions across the NZ major-bank, specialist-lender, and alternative-lender book. Where a band is given (for example, "7% to 13% widely observed for secured term loans"), the band describes the typical range observed, not a single lender's offer. The actual rate any specific borrower is offered depends on the lender's assessment of the application and is always more current than any published band.
Indicative pricing in this guide is not a quote, an offer, or a personalised recommendation. The indicative bands are educational class information. Any rate, fee, or term in this guide is subject to the lender's credit assessment, the borrower's position at application, and movements in the wholesale market between the date of last review and the date of application. Tax-treatment statements (interest deductibility, GST on fees) are general in nature and subject to the accountant's confirmation on the specific business position.
This guide was last reviewed on the date shown in the byline. The structural framework (secured vs unsecured, GSA vs PPSR vs mortgage, PG enforcement sequence) is stable across review cycles; the indicative pricing bands are refreshed at each review. Where a reader is making an active borrowing decision, the offered rate at application is the authoritative number.
Editor recommends
Security is the single biggest pricing lever in NZ business lending. These three pages dig into the trade-offs.
References
Primary source for how PPSR registrations work, who can register, and how priority is established.
Statutory basis for security interests in personal property in NZ.
Prudential framework that constrains major-bank unsecured business lending.
CCCFA scope and where business lending interacts with consumer-credit rules for sole traders and personal guarantors.
Business interest deduction framework, subject to the accountant's confirmation on the specific business position.
Director-duty framework relevant to personal guarantees on company borrowing.
NZ SME lending market context.
FAQ
A secured business loan attaches a specific legal charge to a business asset, registered on the PPSR or as a property mortgage. An unsecured business loan carries no such charge. The practical effect is that a secured lender has a defined recovery path against the asset if the borrower defaults, while an unsecured lender's only recovery path is a money judgment, typically pursued against a director who has signed a personal guarantee. Pricing on secured loans is widely observed at 5 to 10 percentage points below the unsecured equivalent.
In a strict legal sense, yes. The loan itself has no security interest registered against a business asset, so the company's assets are not encumbered. In a practical sense, the personal guarantee creates a separate exposure on the director's personal balance sheet that is enforceable if the company cannot pay. NZ alternative lenders almost always require a PG on unsecured lending, so the director's position is rarely as exposure-free as the word "unsecured" implies.
The widely observed indicative gap is 5 to 10 percentage points across most loan-amount bands. A property-secured commercial mortgage might indicative-price at around 7%, an unsecured alternative-lender term loan at around 17%; that is a 10-point gap on the same amount. The gap narrows somewhat at the larger end of the market and widens at the smallest end, where unsecured product pricing climbs sharply on small-loan unit economics. Actual rates depend on the lender's assessment of the specific application.
A General Security Agreement is a contract granting the lender a security interest in present and after-acquired property of the business. It is registered on the Personal Property Securities Register. GSAs are widely required on bank-issued business lending above a certain size, on specialist-lender term loans where the business has trading assets to secure, and sometimes on larger alternative-lender facilities. The GSA covers stock, plant, debtors, and other business assets without naming each one individually.
A PPSR registration is a public record that a lender has a security interest in specific or general property of a business. The register is managed by the Companies Office and is publicly searchable for a small fee. Any prospective new lender, buyer, or counterparty can search the PPSR before extending credit or buying an asset, which is widely done as part of due diligence on any secured facility or major asset purchase.
In practice, this is rare on lending below $1M. NZ alternative lenders almost always require a PG from at least one director. Major-bank unsecured small-business facilities (overdrafts, credit cards) also typically require a PG. PG-free unsecured lending is largely limited to very large borrowers (over $5M turnover, multiple years of audited accounts) and even there, negative pledges and other contractual constraints are common substitutes for the PG.
The lender has a defined recovery path against the secured asset. On a chattel-mortgaged vehicle or piece of plant, the lender can typically repossess and sell the asset following the contractual default process, which commonly takes weeks to months. On a property-secured loan, mortgagee sale is the regulated process, which takes longer (typically months) but ends in the same outcome: the asset is sold to recover the debt. Any shortfall after the sale (the deficiency) is typically pursued against the guarantor.
The lender has no asset to recover against, so the path is a money judgment in court. The widely observed sequence is: company default, formal demand on the company, formal demand on the personal guarantor, statutory demand under the Companies Act, court action for a money judgment, and enforcement of the judgment against the guarantor's personal assets. The full sequence commonly runs 4 to 9 months from first default. Bankruptcy of the guarantor is the end of the road in some cases.
No. Secured loans are typically cheaper, but they are not always available or appropriate. A short-term cash-flow gap of 6 to 12 weeks on $30K is poorly served by a 5-year secured term loan; the unsecured short-term product exists for exactly that case. A business with no qualifying security cannot offer a chattel mortgage. The right structure depends on the loan purpose, the available security, and the term horizon. A blended position (a secured asset facility plus a smaller unsecured working-capital line) is widely used in NZ.
Yes, materially. Major banks dominate property-secured and large GSA-secured lending. Specialist asset-finance lenders dominate vehicle and plant chattel mortgages. Alternative lenders dominate unsecured term lending in the $25K to $250K range. There is some overlap (Heartland Bank, for example, runs both a strong secured book and an online unsecured product), but the broad split is stable. Borrowers commonly hold facilities with more than one lender across these categories.
Interest on borrowing used for business purposes is generally deductible against business income, subject to the accountant's confirmation on the specific business position. The deductibility framework is set out in the Income Tax Act 2007 and IRD guidance. Mixed-use borrowing (where part of the loan is used for non-business purposes) requires apportionment, which the accountant is the right person to confirm. The deductibility position is the same for secured and unsecured business loans.
Both applications widely require company financials (12 to 24 months), recent bank statements, GST returns, and a director-information sheet. A secured application additionally requires asset valuation evidence (a registered valuation for property; an invoice or independent valuation for plant or vehicles), title documents where applicable, and a draft PPSR or mortgage registration. An unsecured application additionally requires accounting-software access (Xero, MYOB) or longer bank-statement history for the cash-flow assessment that substitutes for the asset assessment.
Often yes, where the business has acquired qualifying security (a vehicle, plant, or property purchase) since the original unsecured loan was written. A widely observed refinance path is from a 2-year alternative-lender unsecured term loan into a 5-year secured term loan or chattel mortgage at a meaningfully lower rate. The savings depend on the rate gap and the remaining unsecured term. A break fee on the unsecured loan and the cost of the new security registration are typical refinance costs to factor in.
Related
Equipment finance
The asset-secured product where the chattel mortgage and PPSR registration mechanics described in this guide are most commonly applied.
Read onNZ business loan rates 2026
The companion guide on indicative rate bands across NZ business lending products.
Read onWorking capital
The use case most commonly funded by unsecured short-term lending, where the structural choice in this guide matters most.
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.
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