Bridging the gap between paying offshore suppliers and collecting from NZ customers. Letters of credit, trade finance lines, import loans, and the FX hedging that commonly sits alongside. Indicative costs and three borrower scenarios.
Last reviewed 5 May 2026
Indicative repayment
Weekly
$7,941/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
6 months at 11.00%. Prospa will ask a few quick questions, then provide a firm quote and funding if eligible.
Redirecting…
Indicative only. Why we say this
Quick answer
What it is
Import and trade finance is short-term borrowing used by NZ businesses paying overseas suppliers ahead of inbound NZ revenue. The defining gap is the lead-time between transferring funds offshore (typically on order or on bill of lading) and collecting from the NZ customer (commonly 30 to 60 days after the goods sell through). Across sea-freighted goods, the total cycle commonly runs 90 to 180 days end-to-end.
NZ importers commonly use four structures. Letters of credit (LCs) issued by a major NZ bank guarantee payment to the overseas supplier on presentation of shipping documents. Trade finance lines provide a revolving facility drawn against confirmed purchase orders. Specialist import loans cover the in-transit cash gap as a defined term loan. And invoice finance, drawn against the NZ customer receivable that the import is funding, fits where the customer is established and on credit terms.
FX exposure is the second leg of almost every NZ import-finance conversation. NZD volatility against USD, AUD, EUR, GBP, and CNY moves the landed cost between order and arrival. Forward contracts arranged at the same bank as the LC, or at a specialist FX provider, lock in the rate. Subject to the accountant's confirmation on hedge accounting treatment.
Typical amount
$50K to $5M
Term
60 to 180 days
Security
Goods or GSA
Rate band
7% to 14% indicative
Common scenarios
01
An Auckland homewares importer paying $250K USD to a Vietnamese supplier on bill of lading. 5-week sea freight to Ports of Auckland, then 8 to 12 weeks of retail sell-through. A trade finance line covers the 90 to 120-day total cycle.
02
A Christchurch building-materials wholesaler importing $480K AUD of structural fixings from Sydney for a regional commercial-build pipeline. 3-week sea freight, then 60-day customer terms.
03
A Wellington FMCG distributor importing $120K USD of European specialty foods. Air freight or refrigerated sea freight, with shorter shelf-life requiring tighter cycle management. A 90-day import loan typically fits.
04
A Hamilton manufacturer importing $850K EUR of European production machinery. LC issued against the supplier, drawn down on shipping documents. Term loan refinances the LC drawdown after commissioning.
05
A NZ wholesaler with a confirmed purchase order from a major retail chain ($350K, 60-day terms). The PO supports a trade finance drawdown to fund offshore production and freight ahead of fulfilment.
06
A NZ apparel brand placing pre-season factory orders 5 to 7 months ahead of retail sell-through. Tooling and material deposits paid 90 to 120 days before bill of lading.
07
CMA CGM Plus and similar shipping-line finance products advance freight charges and insurance against the bill of lading. Suits importers with established carrier relationships and recurring volume.
Structures
NZ bank issues an LC to the overseas supplier guaranteeing payment on presentation of shipping documents. Drawdown converts to a short-term loan on settlement.
Revolving facility drawn against confirmed purchase orders. Each drawdown self-liquidates as the corresponding receivable settles. Interest only on drawn balance.
Defined-term loan from a specialist provider funding a single import cycle. Repaid in full when the NZ customer receivable settles.
Lender advances against the NZ customer purchase order or invoice that the import is funding. Common where customer is investment-grade.
Decision matrix
| Feature | Letter of credit | Trade finance line | Import loan | Invoice finance |
|---|---|---|---|---|
| Container imports, recurring | Best fit | Best fit | Works | Works |
| One-off capital machinery | Best fit | Marginal | Best fit | No |
| Confirmed PO from major retailer | Works | Best fit | Works | Best fit |
| Perishable or short-shelf goods | Works | Best fit | Best fit | Works |
| New-supplier first transaction | Best fit (LC builds trust) | Marginal | Marginal | Marginal |
| Established supplier, repeat orders | Works | Best fit | Works | Works |
| Importer without major-bank line | Marginal | Marginal | Best fit | Works |
| FX hedging required | Best fit (paired) | Best fit (paired) | Works | Works |
Worked scenarios
Retail and wholesale
A Penrose-based homewares importer placing a $250,000 USD order with a Vietnamese ceramics supplier. 5-week sea freight to Ports of Auckland. NZ wholesale customers settle on 60-day terms after delivery, giving a 95-day cycle from supplier payment to NZ receipt.
Structure: bank-issued letter of credit with the NZ bank against the company's established trade finance facility. NZD/USD forward contract booked at the same bank to lock the landed cost. LC drawdown converts to a 90-day import loan at indicative 9% p.a. on landing. Total finance cost across the cycle runs around $5,800 NZD on indicative inputs.
Indicative figures
Wholesale distribution
A Sydenham building-materials wholesaler importing $480,000 AUD of structural fixings from Sydney across a 3-week sea-freight cycle. NZ commercial-build customers run 60-day account terms post-delivery.
Structure: $500,000 trade finance line at indicative 10% p.a. on drawn balance, secured by general security agreement (GSA) over inventory. Average drawn balance across the year $280,000. Annual indicative finance cost $28,000. AUD/NZD forwards arranged alongside.
Indicative figures
Manufacturing capital equipment
A Hamilton precision-engineering business importing $850,000 EUR of CNC production machinery from Germany. 12-week order-to-shipment lead, then 4-week sea freight, plus 6 weeks of commissioning before production output.
Structure: 180-day deferred-payment LC issued by major NZ bank, drawn down on bill of lading and refinanced via a 5-year secured equipment loan post-commissioning at indicative 8% p.a. EUR/NZD forward booked at the same bank for the LC settlement value. LC fees indicative 1.5% of the LC value plus the 180-day finance margin.
Indicative figures
Common pitfalls
Import finance carries the standard credit risks of any short-term business borrowing, plus FX, freight, and supplier risk on top. The pitfalls below are the patterns commonly seen across NZ importer files.
01
A 5% NZD slide between order and bill of lading on a $250,000 USD shipment is around $20,000 NZD of unbudgeted landed cost. Forward contracts at the same bank as the LC commonly remove the exposure for a small margin.
02
Customs clearance, biosecurity inspection (MPI), or container-yard congestion routinely adds 1 to 3 weeks to the modelled cycle. Trade finance facilities sized to the modelled cycle without buffer become stretched on the slower-arrival case.
03
A sight LC pays the supplier on presentation of documents; a deferred-payment LC pays at a defined number of days post-presentation. Mismatching the LC type to the sales cycle creates either supplier friction or a cash-gap surprise.
04
A quality dispute or short-shipment claim against the overseas supplier can leave funds locked under the LC while the dispute is resolved. NZ Customs and MPI release timing is typically separate from the supplier dispute timing.
05
Without PPSR registration over the imported stock, the trade financier has no priority claim on the goods if the importer fails. Most NZ trade finance facilities require GSA or specific stock-security registration.
06
Trade finance only works where the gross margin on the imported goods exceeds the finance cost plus FX risk plus freight. A 12% gross margin against an 11% all-in finance cost is structurally fragile.
Eligibility and lender criteria
Major NZ banks (BNZ, ANZ, ASB, Westpac) offer letter-of-credit and trade finance facilities to established importers, typically requiring 2 to 3 years of trading history, audited or reviewed financial statements, and a documented import-and-onsell business model. The bank assesses both the importer's cash-flow position and the underlying transaction (supplier reliability, product saleability, freight terms).
Security requirements typically include a general security agreement (GSA) over the company's assets, PPSR registration over imported stock and book debts, and director personal guarantees. Larger or higher-risk facilities can require registered mortgage security over property. Letters of credit themselves create a contingent liability on the bank's balance sheet, so the LC limit is set against the importer's overall credit-risk appetite at the bank.
Specialist trade-finance providers (Tradeplus24 NZ, Bibby Financial Services, GetCapital trade-finance products, and shipping-line finance such as CMA CGM Plus) operate alongside or as alternatives to bank LCs. The eligibility bar is typically lower (1 to 2 years of trading rather than 2 to 3, smaller minimum facility size, faster onboarding) and the rate band is correspondingly higher. Specialist providers commonly suit importers below the major-bank cut-off or those wanting capacity outside their main banking relationship.
FX hedging arrangements are commonly written alongside the trade finance facility. Most NZ importers use forward contracts (lock in a future date and rate) rather than options. Hedge accounting treatment under NZ IAS 39 / NZ IFRS 9 affects the P&L recognition and is one of the items the accountant typically reviews when sizing the hedging programme.
Lenders to know
NZ trade finance is dominated by the major banks for established importers, with specialist trade financiers and alternative lenders covering the smaller and harder-profile end of the market. The shortlist below captures the main reference points.
Best for major-bank LCs and trade lines
Registered NZ bank. Letters of credit, trade finance lines, and FX-hedging desk integration. Suits established importers with 2-plus years of trading.
Indicative rate band:7% to 11% indicative p.a.
Read onBest for large-amount LCs and Asia-Pacific corridors
Registered NZ bank. Trade finance and LC capacity across major importing corridors (China, Australia, Europe). Strong USD and AUD hedging desk.
Indicative rate band:7% to 11% indicative p.a.
Read onBest for mid-market trade finance
Registered NZ bank. Trade finance lines, LCs, and FX-paired facilities. Commonly used by mid-market wholesalers and distributors.
Indicative rate band:7% to 12% indicative p.a.
Read onBest for trans-Tasman trade corridors
Registered NZ bank with a deep trans-Tasman desk. AUD trade finance, LCs across Asia-Pacific, and integrated FX.
Indicative rate band:7% to 12% indicative p.a.
Read onBest for specialist trade finance for smaller importers
Australasian alternative lender with NZ presence. Trade finance and import-loan products suited to importers below the major-bank threshold.
Indicative rate band:11% to 18% indicative p.a.
Read onWhen it goes wrong
The imported stock arrives and clears NZ Customs and MPI. The downstream NZ customer cancels the order or fails to pay. The trade finance drawdown remains outstanding while the goods sit in storage.
What happens:Importer carries holding cost (storage, insurance, finance interest) until alternative buyer is found. Lender pursues under GSA and PG. Stock can be liquidated under PPSR enforcement at a discount to expected value.
NZD weakens 8% to 10% between order and bill of lading on an unhedged USD-denominated shipment. Landed cost rises beyond the budgeted gross margin.
What happens:Margin compression or loss on the cycle. If recurring, the importer's underlying viability is challenged. Forward contracts arranged alongside the LC commonly mitigate the exposure for a small premium.
Goods arrive short of the LC quantity, or fail QA against the contracted specification. Funds remain locked under the LC pending dispute resolution.
What happens:Cash gap extends while dispute resolves through the LC framework (UCP 600 documentary rules) and any ICC arbitration. NZ customer-side commitments can slip in the interim.
A bank credit review concludes the trade finance line is no longer appropriate (turnover decline, sector concerns, broader portfolio rebalancing). The line is withdrawn at next renewal.
What happens:Importer faces a 30 to 90-day window to refinance with a specialist trade financier or alternative bank. Refinancing cost typically higher. Operating cycle disrupted during the transition.
Trade finance combines credit risk, FX risk, freight risk, and supplier risk in a single transaction. The accountant and broker conversations commonly run all four legs together rather than treating the loan in isolation.
References
Import clearance, tariff, and documentation framework for NZ importers.
Biosecurity inspection and clearance framing for imported goods.
GST on imports, deferred payment scheme framing.
NZD exchange-rate context for FX-hedging discussion.
NZ import volume and corridor framing.
PPSR registration framework for goods-secured trade finance facilities.
FAQ
A letter of credit (LC) is a bank-issued instrument guaranteeing payment to an overseas supplier on presentation of contracted shipping documents (typically bill of lading, commercial invoice, packing list, certificate of origin). The NZ bank pays the supplier on presentation, then the importer settles with the bank either on sight or at a deferred date. LCs are the standard pathway for new supplier relationships and larger transactions.
Term commonly runs 60 to 180 days from drawdown to repayment, matching the underlying import-and-onsell cycle. Container imports from Asia commonly run 90 to 120 days; capital-equipment LCs from Europe commonly run 180 days; trans-Tasman imports commonly run 60 to 90 days.
Indicative rates run 7% to 14% per annum across the NZ market. Major-bank LCs and trade lines sit at the lower end (7% to 11%) for established importers; specialist trade financiers and alternative-lender import loans sit at the higher end (10% to 14%). The all-in cost includes LC fees (typically 1% to 2% of facility value annualised) plus the funded margin on drawn amounts.
Most NZ importers hedge USD, AUD, EUR, GBP, or CNY exposure across the cycle, typically through forward contracts at the same bank as the LC or trade finance line. A 60 to 180-day exposure left unhedged exposes landed cost to NZD volatility. The accountant or treasury function typically sizes the hedge programme alongside the trade finance facility.
GST on imported goods is generally payable to NZ Customs at the point of clearance, on the customs value plus duty plus freight and insurance. GST-registered importers can recover the import GST in the relevant GST return; eligible high-volume importers can apply to defer the GST payment via the GST Deferred Payment Scheme administered by NZ Customs and IRD, subject to the accountant's confirmation.
Interest on a facility used wholly for business purposes (importing goods for resale is clearly business-purpose) is generally deductible against business income in New Zealand. LC fees and FX-hedging premiums commonly receive similar treatment, subject to the accountant's confirmation on the specific accounting policy and hedge designation.
A sight LC pays the overseas supplier on presentation of documents, with the importer settling the bank either on sight or via a separate import loan. A deferred-payment (or usance) LC commits the bank to pay the supplier at a defined number of days after presentation (commonly 30, 60, 90, 120, or 180), giving the importer a built-in cash-gap window before settlement.
Standard documents include NZBN, last 2 to 3 years of financial statements, last 6 months of business bank statements, supplier and customer schedules, sample purchase orders, customs and freight forwarder details, and (for LCs) the supplier-issued draft commercial invoice. Larger applications add a working-capital cycle analysis and FX-hedging policy.
Major-bank trade finance commonly requires 2 to 3 years of trading and a defined import volume. Smaller or newer importers typically access specialist trade financiers (GetCapital, Bibby, Tradeplus24-style providers) at higher rate bands but with lower entry thresholds. Invoice finance against a confirmed NZ customer order is a common alternative pathway.
A forward contract at the same NZ bank as the LC locks in the NZD-to-foreign-currency exchange rate for a defined future settlement date matching the LC tenure. The importer pays the bank a small forward-points spread above spot. NZ IFRS hedge accounting treatment commonly applies for designated cash-flow hedges, subject to the accountant's confirmation.
NZ Customs and MPI clearance typically runs 1 to 5 business days for compliant shipments; biosecurity holds can extend that materially. Trade finance facility tenure is set against the modelled cycle, and most providers allow short extensions on documented delays. Persistent or material delays can trigger covenant or facility-review conversations.
Common alternatives include specialist trade finance providers (GetCapital, Bibby, sector-specific providers), invoice finance against the confirmed NZ customer order or invoice that the import is funding, supplier credit terms (where the overseas supplier extends 30 to 60-day terms), and shipping-line finance products such as CMA CGM Plus that advance freight and insurance against the bill of lading.
Related
Working capital loan
The broader category that import-cycle borrowing sits inside.
Read onInvoice finance
The structure that fits where a NZ customer purchase order anchors the import.
Read onBuy stock or inventory
The companion reason for non-imported stock and inventory funding.
Read onE-commerce business loans
Most NZ e-commerce operators import inventory, making trade finance a routine working-capital structure.
Read onClothing and fashion retail
Imported designer ranges from Asia and Europe typically require letter-of-credit or trade finance support.
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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What the figures show
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What the lender decides
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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.
