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Business Loan Brokers - The Definitive New Zealand Guide

Do you need a business loan? Our guide explains how business loan brokers work, their pros, cons and alternatives, and shortlists trusted brokers alongside lenders who have a genuine willingness to lend.
Updated 11 March 2024
Summary
  • A business loan broker is an intermediary between businesses seeking loans and potential lenders. They are not lenders themselves but facilitate the process of securing a loan. A business loan broker's primary role is to understand a business's financial needs and match them with suitable lenders. They use their knowledge of the loan market to find the best options for their clients. 
  • Experienced business loan brokers know what lenders will work with certain types of clients based on the industry, turnover and risks. They aim to get the lowest interest rate and best terms for their clients and do this by following a general process:
  1. Assessing the business's financial health and loan requirements.
  2. Contacting suitable lenders and applying for loans - how many brokers apply for will vary.
  3. If an application is approved, the broker will recommend the most appropriate type of loan and lender and negotiate terms and conditions on behalf of the client.

Important: How do brokers differ from direct business lenders?
Generally, a broker acts as a middleman and does not lend money but connects borrowers with multiple lenders. This is different to a direct lender (e.g., bank, online lenders, building society or credit union) that provides the loan directly to the borrower.

To help explain the role of business loan brokers, their services, pros and cons and alternatives, our guide covers:
Looking to apply for a business loan? Know this first:
  • Brokers will need your financial documents – lenders are quick to look for what’s wrong with an application as a reason to decline a loan application, so thorough checks are critical, and this is a significant benefit of using a broker who can identify issues upfront given their experience. They will review your business accounts (profit and loss, balance sheet and cash flow statement), bank statements, debtors (payments due from your customers) and your bank balance to see your cash position, indicating your ability to meet the interest costs and repayment terms.
  • The likelihood of being approved will depend on your financial situation – a broker will usually know which lenders are best for an industry, loan size or business needs. No business loan is like another – the terms, interest rate and amount are tailored to the needs of each business. 
  • No lender will publish their business loan interest rates upfront - this makes comparing lenders difficult and why brokers are a popular option for business owners.
  • Business loans are all about the risk to a lender - the more security you can offer, or the better your cash flow, the better the terms of any loan.
  • Are you a startup or a new business? Lenders don't typically accept applications unless you're a stable business with a proven history. If you want money to start a business, options include angel investors, venture capital, government grants, and crowdfunding.

Useful resources:

MoneyHub Founder Christopher Walsh shares his views on business loan brokers:

"Each business has unique challenges and requirements, and navigating the complex world of business financing can be overwhelming. While many banks have stringent policies that lead to many loan rejections, business loan brokers can provide much-needed relief. They are pivotal in bridging this gap, making the process less daunting and more manageable.

The journey of securing a business loan can often be disheartening. Lenders may not fully engage with the unique aspects of your business, leading to undue demands or outright denials. However, business loan brokers help you stand out by understanding your business and advocating on your behalf. They navigate through the complex lending environment to find suitable options, ensuring you feel supported and heard.

In an era of unprecedented living costs, slower debtor payments, and generally higher business costs, gaining access to additional working capital is more crucial than ever. A business loan broker will fight in your corner to get a result, leaving you to run your business without distractions".
MoneyHub Founder
Christopher Walsh

Types of Business Loans and Broker Process

Before approaching a broker, it's important to know upfront that there are three different business loans you can consider. There are benefits and downsides to each, which we outline below. The terms you receive will vary between the bank, building society and specialist business lender.

1. Unsecured business loans

An unsecured business loan is borrowing that doesn’t use your home or business as security. This means if you can’t repay the loan, the lender won’t have an automatic right to take possession of any assets you own. The downside is that the interest rate is usually higher than a secured loan (as there is more risk), and the amount you can borrow will be limited to, in most cases, around $50,000.

2. Secured business loans

A secured business loan involves a personal guarantee, security over whatever's being purchased with the loan, or over assets in the business. It is also common for your home to be offered as security. Secured loans offer a more substantial borrowing amount with a lower interest rate (compared to unsecured loans, as the lender has an asset to claim if you can't meet repayments). But the risks are high – if your business doesn't go to plan and you can't repay the loan, the lender can take your home, car or business assets.

Step-by-Step Process Guide: Working with a Business Loan Broker

Although the specific procedures may vary among brokers, the typical journey you can expect from initial contact to receiving your loan funds usually involves these steps:
  1. Identifying Your Loan Needs: Assess the financial needs of your business. Determine the loan amount, purpose, and ideal terms.
  2. Researching Brokers: Look for reputable business loan brokers - check their experience, client reviews, and areas of expertise.
  3. Initial Contact: Reach out to the selected broker. Discuss your business, loan requirements, and any concerns you have.
  4. Providing Information: The broker will request financial documents and other relevant business information to understand your situation better.
  5. Broker Assessment: The broker evaluates your business's financial health and loan requirements to identify suitable loan options.
  6. Loan Options Presentation: The broker presents you with various loan options, explaining the pros and cons of each.
  7. Application Preparation: Once you choose an option, the broker helps prepare and submit your loan application to the chosen lender(s).
  8. Negotiation and Approval: The broker negotiates terms with lenders and assists you through the loan approval process.
  9. Finalising the Loan: If your loan is approved, the broker reviews the final loan offer with you, ensuring that you understand all terms and conditions.
  10. Loan Disbursement: After accepting the offer, the loan is processed, and funds are disbursed to your business account.
​

Pros and Cons of Using Business Loan Brokers to Arrange Finance

Our overview of advantages and disadvantages represents what you can typically expect from a business loan broker. While the range of services and advice may vary, with some brokers offering more and others less, the following points capture the most frequently encountered pros and cons:​

​Pros:
  • Access to a Wide Range of Lenders and Loan Products: Brokers have established networks with various lenders, including banks, non-bank lenders, and private financiers. This means they can offer more products than a single direct lender.
  • Expertise in Finding Competitive Rates and Terms: Brokers are experienced in the loan market and understand how to secure competitive rates; their standard service includes comparing offers from multiple lenders to ensure favourable terms.
  • Assistance with Paperwork and Application Process: Brokers prepare and submit loan applications and guide businesses through complex financial documentation, increasing the likelihood of loan approval (in most cases).

Cons:
  1. Potential Broker Fees or Commissions: Brokers may charge fees for their services, which can vary significantly. It may be a one-off fee (such as $250 or $500) or a percentage of the loan applied for (such as 2% to 5%). Because every broker's fees vary, it's essential to understand the fee structure before engaging a broker.
  2. Possible Bias Towards Certain Lenders: Some brokers might favour certain lenders due to higher commissions or established relationships. This can lead to a conflict of interest, potentially not aligning with the client's best interests. For this reason, it's always best to ask the broker what lenders they work with to ensure the market is covered widely. 

The Risk of Not Exploring All Available Options Independently: If the broker only works with a handful of lenders, they're unlikely to offer all the available loan options. For this reason, we suggest approaching one or two lenders independently (and alongside a broker) to get an idea of what lenders will offer.

Direct Lending Options - An Alternative to Using a Business Loan Broker

​Direct lenders who offer business loans and lines of credit include banks, online lenders, building societies, credit unions and specialist business financers. While banks have a reputation for being sluggish with applications, the rise of online lenders (offering quick, technology-driven loan processes) has made it easier (and faster) for business owners to get an idea of what kind of loan they will qualify for.

Many business owners choose to apply directly with lenders for many reasons - they have an existing relationship with their bank or lender, or they want to control the process and ensure a direct relationship should a loan be approved. 

However, it can take time to approach banks, online lenders and/or other lenders to secure funding. If you have general questions about taking on financing and how it will affect your business, lenders won't usually explain like brokers will, which can be frustrating unless you're confident in your approach. 
However, dealing directly with the lender gives business owners more control over the process and may find opportunities tailored to their needs. Other advantages of working directly with lenders include:
  1. Potentially lower costs: Direct loans may not include the broker's fee or commission, potentially reducing the overall cost of the loan.
  2. Direct communication: Dealing directly with the lender ensures clear and direct communication, allowing for better understanding and quicker resolution of queries.
  3. Tailored services: Direct lenders may offer more personalised services as they understand their loan products in-depth.​

How to Choose Between a Broker and Applying for a Business Loan Directly with a Lender?

There are several factors to consider:
  1. Business Needs: Assess your business's specific needs, including the purpose of the loan, the amount needed, and the preferred repayment schedule. If you need help deciding, a broker is arguably best to do this.
  2. Loan Size: Larger loans might benefit from a broker's expertise in securing favourable terms, while smaller loans might be more efficiently handled directly.
  3. Credit History: Businesses with strong credit histories may find it easier to approach lenders directly, while those with less-than-perfect credit, low turnover or a lack of profitability might benefit from a broker's assistance in finding accommodating lenders.

​Before making any loan application, we suggest the following process:
  1. Research Thoroughly: Investigate both routes thoroughly, examining the terms, rates, and fees offered by various direct lenders and comparing them with what a broker could potentially offer.
  2. Seek Recommendations: Consult other business owners in your industry for their experiences and recommendations.
  3. Transparency is Key: Ensure clarity in all dealings, whether understanding a broker's fee structure or a lender's loan terms.
  4. Consider Long-Term Relationships: Establishing a good relationship with a direct lender can be beneficial for future financial needs.

Consider Direct Online Lenders Like Prospa Before Consulting a Business Loan Broker

As part of securing a business loan, you may want to consider exploring direct online lending options before engaging with a business loan broker. This approach ensures you're keeping all avenues open and moving forward efficiently. A prime example of such an online lender is Prospa, which is known for its user-friendly approach and competitive offerings.

Why Consider Starting with Prospa?
  • Quick and Easy Process: Applying directly with Prospa is straightforward. Prospa provides an early indication of loan options that are available to your business without long waiting periods.
  • Understanding Your Options: By getting a sense of what's available through direct lenders like Prospa, you're better prepared to discuss your needs and preferences with a broker later.
  • Keeping Things Moving: Applying directly to an online lender ensures that you actively pursue all possible business financing routes. At the same time, you explore the additional benefits that a broker can provide.

Navigating Your Business Loan Journey
Once you have a clearer picture from direct lenders like Prospa, working with a business loan broker can enhance your chances of finding the best loan. Brokers can compare your Prospa offer with other lending options, negotiate terms, and use their expertise to tailor solutions to your business's unique needs.
​
Important: MoneyHub may receive a referral commission, but this does not influence our recommendations. Our priority is to provide reliable and unbiased information. Interest rates and assessment times can vary based on your circumstances.
Christopher Walsh
MoneyHub Founder
Our Top Business Loans Provider:
​

Business Loan Lenders Popular with Brokers

Below is a list of lenders commonly partnered with by business loan brokers. This will help you see the range of financing options available and familiarise you with the lenders who may evaluate your loan applications.

Know This: Your business is unique, and for this reason we can't give any guidance as to what the terms of a business loan could be, nor the interest rates. In the list below, we have listed trusted New Zealand business loan lenders and separated them into specialist business loan lenders (online platforms, peer-to-peer lenders) and traditional lenders (banks etc.).

Specialist Business Loan Lenders

Prospa (Small Business Loans)

  • Loan approval fee: 3.50% of the loan value. You are only charged this fee if you proceed with the loan and draw it down.
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Criteria: Secured lending only, minimum 6 months trading to apply.
  • Interest-only repayments: Not permitted.
  • Repayments: Payments can be made weekly, fortnightly or monthly, and early repayments are permitted. Optional no repayments for the first 4 weeks.
  • Loan term: Minimum 3 months, maximum 24 months.
  • Minimum loan amount: $5,000 (and up to $100,000).
  • More details: Prospa Business Loans or visit our Prospa Business Loans Review

Alternative Funding Option:

BizCap (Small Business Loans)

  • Loan approval fee: 2.99% of the loan value. You are only charged this fee if you proceed with the loan and draw it down.
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Criteria: You must have been in business for at least 6 months, have an active NZBN, and your turnover must be over $10,000 a month (this requirement may be higher for certain industries).
  • Interest-only repayments: Not permitted
  • Repayments: Payments can be made weekly and early repayments don't incur any fees.
  • Loan term: Minimum 3 months, maximum 12 months
  • Minimum loan amount: $5,000 (and up to $2,000,000)
  • More details: Bizcap Business Loans

Traditional Lenders

ANZ Business Loan

  • Loan approval fee: 1% of the loan amount with a minimum fee of $250
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Available for up to five years.
  • Repayments: Payments can be made weekly, fortnightly, monthly or quarterly.
  • Loan term: Up to 10 years
  • Minimum loan amount: $5,000
  • More details: ANZ Business Loans

ASB Business Loan

  • Loan approval fee: 1% of the loan amount with a minimum fee of $25
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Available for up to five years.
  • Repayments: Payments can be made weekly, fortnightly, monthly or quarterly.
  • Loan term: Up to 20 years
  • Minimum loan amount: Assessed on a case-by-case basis
  • More details: ASB Business Loans

Heartland Bank Business Loan

  • Loan approval fee: Variable
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Not available
  • Repayments: Payments are monthly
  • Loan term: Up to 5 years (secured and unsecured loans)
  • Minimum loan amount: $10,000
  • More details: ​Heartland Business Loans

Kiwibank Business Loan

  • ​​Loan approval fee: Minimum fee of $25
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Available
  • Repayments: Payments can be made weekly, fortnightly or monthly
  • Loan term: Up to 5 years
  • Minimum loan amount: Variable
  • More details: Kiwibank Business Loans

TSB Business Loan

  • Loan approval fee: Variable
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Variable
  • Repayments: Payments can be made weekly, fortnightly or monthly.
  • Loan term: Variable
  • Minimum loan amount: Variable
  • More details: TSB Business Loans

BNZ Business Loans

  • Loan approval fee: Variable
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Variable
  • Repayments: Payments can be made weekly, fortnightly or monthly.
  • Loan term: Variable
  • Minimum loan amount: Variable
  • More details: BNZ Business Loans

Zip Business Loans

  • Loan approval fee: 2% to 3% of the loan amount
  • Interest rates: Provided after successful applications and fixed for the life of the loan.
  • Interest-only repayments: Variable, although Zip suggests it is 0.50% to 2.50% per month (i.e. 6.00% to 18.00% p.a.)
  • Repayments: Payments can be made weekly, fortnightly or monthly.
  • Loan term: Variable
  • Minimum loan amount: Variable
  • More details: Zip Business Loans
​

Selecting a Business Loan Broker and Questions to Ask Upfront

Beyond brokers who deliver personalised service, take the time to understand your business's unique needs and communicate clearly, we suggest following this proven checklist to find someone who will best represent your interests:
  1. Experience and Expertise: Look for brokers with a solid track record in business lending and knowledge of various loan products.
  2. Reputation and Reviews: Check online reviews, testimonials, and any industry awards or recognitions.
  3. Transparency: The broker should be upfront about their fees, how they're paid, and any potential conflicts of interest.
  4. Lender Network: Choose brokers with a broad network of lenders, including banks, non-bank lenders, and alternative financing sources.
  5. Industry Knowledge: Prefer brokers who understand your specific industry and have experience working with similar businesses.​

Questions to ask upfront:

To help you find the right broker, asking some or all of the questions below will help you gain a deeper understanding of a broker's capabilities, ethics, and suitability for your specific financial needs. The responses will also indicate the broker's transparency, breadth of network, and commitment to serving your business's best interests.

​1. What Lenders Do You Work With?
  • This question helps you understand the broker's network and whether they have diverse lending sources. A broker with a wide array of lenders can offer more options that might better suit your financial needs.
  • You want to hear that they work with various lenders, including major banks, credit unions, online lenders, and niche financial institutions. This diversity indicates their ability to tailor loan options to different types of businesses and financial situations.

2. How Do You Get Paid?
  • Knowing how a broker is compensated is crucial to understanding potential biases in their recommendations. It also helps assess whether the broker's suggestions are in your best interest or motivated by higher commissions.
  • Transparency is key. Good brokers will clearly outline their fee structure, whether a flat fee, a commission paid by the lender, or a percentage of the loan amount. Clarity in this area can help avoid any unexpected costs.

3. What Types of Loans Do You Typically Handle?
  • This question determines if the broker's expertise aligns with your business's financial requirements. Depending on your needs, some brokers specialise in certain loan types or industries, which could be beneficial or limiting.
  • The broker should be experienced in various loan products (like term loans, lines of credit, and equipment financing) and cater to various industries. If they have specific expertise that aligns with your industry, that's a bonus.

4. How Do You Determine the Best Loan Options for a Business?
  • Understanding the broker's process for selecting loan options can give you confidence in their capability and diligence. It also shows their approach to customising their service to your unique needs.
  • The broker should discuss a thorough process of understanding your business's financial standing, plans, and specific needs. They should explain how they evaluate different loan products against these factors to find the best fit for your business.
​

Business Loan Brokers - Frequently Asked Questions

Our Frequently Asked Questions are designed to address common queries regarding business loans. It is divided into two parts: the first section covers general questions about business loans, while the second section is dedicated specifically to queries related to working with Business Loan Brokers. If you have any specific questions while working with a broker, talk to them directly.

​What do you need to qualify for a business loan?

A broker will fill out an application form and supply financial information for your business. This usually includes:
  • A Personal Statement of Financial Position - i.e. your personal assets (property, car etc.), debts (mortgage, credit cards). 
  • Details of how much you take from the business as a salary or wage
  • A business plan (which must explain the need for the loan)
  • A cash flow forecast, usually for the next month or quarter
  • What security you plan to provide for the loan: this usually includes real estate or business assets, and up-to-date valuations. 
  • Details of who owns the business, who is involved in the management and their backgrounds.
  • Details of the operational structure (i.e. company, partnership or sole trader?)
  • IRD tax returns to verify your income statements
  • Copies of bank account statements
  • Confirmation that you have received professional advice from your financial adviser or accountant. They also like to know you’ve sought legal advice.

Once submitted, lenders will perform a credit check on you, so the information you supplied must be accurate. Be aware that before applying, the lender will know very little about your business. Being as detailed as possible, and supplying all the information requested, supports your application. Many business loan applications get held up because applicants don't present or provide the right information. It also helps to understand financial ratios and provide them in your application - the more aware you are of the finances, the higher the chance your business loan will be approved.

How much deposit do I need for a business loan?

None, but fees of 1% to 3% of the loan amount can be charged upfront. These may or may not be added to the balance of the loan.

How much can you borrow for a business loan?

It depends on your business size, but unsecured loans can generally be as high as $75,000, and for small businesses, a $200,000 secured loan is not unusual. Different businesses attract different lending terms, so the only thing that matters is how much your business can borrow.

Can I repay a business loan early?

In most cases, yes, although early repayment charges may apply. Your business loan terms and conditions will set this out. If you plan to pay it back before its term finishes, it may be better to shortlist business loans that have the lowest (or no) early repayment charges. 

How is the interest rate calculated?

Because every business is different, the only way to find out the interest rate for your business is to apply for a loan with a business broker and/or approach lenders directly. The interest rate you are offered will vary between lenders, and your unique business circumstances will influence it, and unlike credit card or mortgage interest, which is fixed, business lending interest rates vary wildly.

For example, an established and profitable company like The Warehouse Group could probably arrange a business loan at 6% or 7% p.a. In contrast, a new café operating for less than six months may be offered 15% p.a. or more. As a reference point, ASB business loans are charged at around 10% to 12% p.a. plus a 'margin' - the riskier the loan, the higher the margin.  

​Banks assess the risk of the business by looking at all the information you supply to calculate an interest rate that suits the risk. Because there are so many variables, we cannot suggest any guidance on interest rates.

Is the interest rate fixed for the period of the business loan?

Yes, every lender offers a fixed interest rate and fixed monthly repayments, so you have certainty over what you will need to repay each month. 

How long does it take to receive business loan funds?

Once your Business loan is approved, the lenders will ask you to sign a loan agreement. Once this is completed and returned to the lender, the money will be transferred into your account within 1 to 3 working days. 

Business Loan Broker-Specific:

Is getting a loan through a broker or directly from a lender cheaper?

It can vary. Direct loans may have lower costs since they don't include broker fees. However, brokers can sometimes negotiate better rates due to their volume of business with lenders. It's important to compare the total costs and all fees.

How do I know if a broker is reputable?

Check their credentials, ask for references, read reviews, and ensure they have a good track record. It's also wise to see if they are registered with any regulatory financial bodies in New Zealand.

Can a broker guarantee loan approval?

Brokers can't guarantee approval as it depends on the lenders' criteria. However, they can enhance the likelihood by correctly matching your needs with suitable lenders.

Should I use a broker if I have a poor credit history?

Brokers can be particularly useful if you have a less-than-perfect credit history, as they may have experience finding lenders more accommodating of various credit situations.

What's the main advantage of direct lending?

The main advantages are potentially lower costs and direct communication with the lender, which can lead to more tailored services and a clearer understanding of the loan agreement.

How long does the loan process take with a broker versus direct lending?

The process can be quicker with a broker due to their established relationships with lenders and knowledge of the application process. Direct lending might take longer, especially if you are comparing multiple lenders yourself.

Can I switch from a broker to a direct lender during the loan process?

Yes, you can switch, but it might involve additional paperwork and could delay the loan process. It's best to thoroughly research both options before starting your application.

Do brokers work with online lenders?

Yes, many brokers work with various lenders, including traditional banks and online lenders, offering a wide range of loan products.

Business Loan Glossary

When you're applying for a loan, common terms are used - our glossary explains what these mean:
  1. Interest rate: This is the annual rate charged for borrowing or earned through an investment, and it's expressed as a percentage that represents the actual yearly cost of funds over the term of a loan. For example, a business loan with an interest rate of 15% means the business will pay 15% of the principal in interest and fees over one year.
  2. Asset-Based Lending: A type of business financing where loans are secured by assets such as inventory, accounts receivable, or other property. This might include a manufacturing company using its machinery as collateral for a loan.
  3. Collateral: An asset offered to secure a loan, acting as protection against loan default. For instance, a business might use commercial property as collateral for a loan.
  4. Guarantor: A person who agrees to repay the borrower's debt should they default on the loan. This might involve a business owner personally guaranteeing a business loan.
  5. Principal: The initial size of a loan or the amount still owed on a loan, excluding interest. For instance, if a business borrows $100,000, this amount is the principal.
  6. Revolving Credit: A flexible line of credit that can be used, repaid, and used again. A common example in New Zealand is a business credit card or a business line of credit.
  7. Secured Loan: A loan where the borrower pledges an asset as collateral. A business might secure a loan against its commercial property.
  8. Unsecured Loan: A loan given without collateral. For example, a small business might receive an unsecured loan based on its creditworthiness and revenue without needing to pledge specific assets as security.

Consider Direct Online Lenders Like Prospa Before Consulting a Business Loan Broker

As part of securing a business loan, you may want to consider exploring direct online lending options before engaging with a business loan broker. This approach ensures you're keeping all avenues open and moving forward efficiently. A prime example of such an online lender is Prospa, which is known for its user-friendly approach and competitive offerings.

Why Consider Starting with Prospa?
  • Quick and Easy Process: Applying directly with Prospa is straightforward. Prospa provides an early indication of loan options that are available to your business without long waiting periods.
  • Understanding Your Options: By getting a sense of what's available through direct lenders like Prospa, you're better prepared to discuss your needs and preferences with a broker later.
  • Keeping Things Moving: Applying directly to an online lender ensures that you actively pursue all possible business financing routes. At the same time, you explore the additional benefits that a broker can provide.

Navigating Your Business Loan Journey
Once you have a clearer picture from direct lenders like Prospa, working with a business loan broker can enhance your chances of finding the best loan. Brokers can compare your Prospa offer with other lending options, negotiate terms, and use their expertise to tailor solutions to your business's unique needs.
​
Important: MoneyHub may receive a referral commission, but this does not influence our recommendations. Our priority is to provide reliable and unbiased information. Interest rates and assessment times can vary based on your circumstances.
Christopher Walsh
MoneyHub Founder
Our Top Business Loans Provider:
Are you a business borrower? Do you have experience with business loans that you would like to share? Contact our research team today.

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