The short answer
The main types of business loans in New Zealand are unsecured and cash flow loans, property-secured loans such as first and second mortgages, caveat and bridging loans, asset and equipment finance, revolving facilities like lines of credit, invoice and trade finance, and specialist loans for tax debt, acquisitions and startups. The right one depends on your purpose, security and speed.
Why are there so many types of business loans?
Because businesses borrow for very different reasons. A Wellington café replacing an espresso machine, a Hamilton earthmoving contractor clearing an IRD bill and an Auckland importer paying a supplier in Shenzhen all need money, but the best loan for each is completely different.
Every type of business finance in New Zealand is really a combination of three choices:
- Security. Is the loan backed by property, an asset, your invoices, or nothing at all?
- Structure. Is it a lump sum repaid over a term, or a facility you draw and repay as you go?
- Purpose. Is it general, or built for something specific like tax, a vehicle or buying a business?
This guide walks through every main type, grouped by how it works, with a link to our detailed page on each. If you want the overview of what LoansOne arranges, start with our business loans hub.
Quick comparison: business loan types at a glance
| Loan type | Security | Speed | Best for |
|---|---|---|---|
| Unsecured business loan | None (often a guarantee) | Very fast | General purposes, no property |
| Cash flow loan | None, assessed on trading | Very fast | Smoothing cash flow gaps |
| First mortgage | Property, first ranking | Fast (private) | Larger amounts, sharper pricing |
| Second mortgage | Property, behind the bank | Fast | Using equity without touching the bank loan |
| Caveat loan | Caveat over property | Very fast | Urgent short-term needs |
| Bridging loan | Property | Fast | Timing gaps until a sale or settlement |
| Asset or equipment finance | The asset itself | Fast | Vehicles, plant, machinery, IT |
| Line of credit | Varies | Fast once set up | Recurring, uneven cash needs |
| Invoice finance | Your unpaid invoices | Fast | Long customer payment terms |
| Trade finance | Stock or the trade itself | Fast | Paying suppliers before you’re paid |
| Tax debt loan | Property or unsecured | Fast | Clearing IRD arrears |
| Acquisition or franchise finance | Business, property or both | Moderate | Buying a business or franchise |
| Commercial property loan | The commercial property | Moderate | Buying or refinancing premises |
Secured or unsecured: the first fork in the road
Before you get into individual products, make one decision: will you offer security?
Secured loans are backed by something the lender can fall back on, such as property, a vehicle, machinery or your invoices. Because the lender’s risk is lower, secured loans usually allow larger amounts, longer terms, more tolerance for bad credit and sharper pricing. The trade-off is that the asset is on the line, and property-secured loans involve a registration on the title and sometimes a valuation.
Unsecured loans have no specific asset behind them. The lender relies on your trading record and usually a personal guarantee from the directors. They’re quicker and simpler to arrange, and your house stays out of it, but they lean harder on clean bank statements and a reasonable credit file.
Neither is better in general. A business owner with plenty of home equity and a patchy credit file is usually better off secured. A profitable online store with no property and strong deposits is usually better off unsecured. Our secured vs unsecured business loans comparison goes deeper, and unsecured loan vs second mortgage compares the two options LoansOne arranges most often.
Unsecured and cash flow loans
These loans don’t need property. The lender looks at how your business trades, mostly through your bank statements.
Unsecured business loans
An unsecured business loan is a lump sum with no real estate security, repaid over a fixed term. Lenders usually take a personal guarantee from the directors and may register a general security interest over business assets on the PPSR. LoansOne arranges unsecured business loans from $20,000 to $500,000, with no real estate security required in most cases.
Best for: established businesses with steady deposits that want funds fast without putting the house on the line.
Cash flow loans
Cash flow loans are a style of unsecured lending sized on your trading cash flow rather than your assets. The lender reads your bank statements to judge how much the business can comfortably repay.
Best for: covering a gap between paying out and getting paid, such as wages during a slow month.
Short-term and fast business loans
Short-term business loans run over months rather than years, and they’re built for quick turnaround. If speed is everything, our page on fast business loans explains what makes funding move quickly and what to have ready. Next-day funding is possible in many cases.
Merchant cash advance
A merchant cash advance gives you a lump sum that’s repaid as a share of your future card or EFTPOS takings. Repayments rise and fall with sales. It suits card-heavy businesses like hospitality and retail, but compare the total cost carefully against a conventional loan.
Property-secured business loans
Using property as security usually unlocks larger amounts, more flexibility on credit and a sharper price. The property can be your home, a rental or commercial premises, and the loan is registered against the title through LINZ.
First mortgages
A first mortgage is the main registered loan on a property, with first claim if things go wrong. Private first mortgages for business purposes suit owners whose bank is too slow or has said no, or who own the property freehold. LoansOne arranges fast, flexible 1st mortgages from $20,000 to $500,000.
Second mortgages
A second mortgage sits behind your existing bank mortgage. You keep the bank loan exactly as it is and borrow against the equity above it. LoansOne arranges 2nd mortgages for business purposes from $20,000 to $500,000, with no cash flow or financial records needed, and bad credit is OK. Our first vs second mortgage comparison shows how they differ.
Business loans against your house
Many Kiwi business owners’ biggest asset is the family home. A business loan against your house uses that equity to fund the business, through either a first or second mortgage.
Caveat loans
A caveat loan is short-term funding where the lender lodges a caveat on your property’s title instead of registering a full mortgage. It can be very fast, and it’s usually used for urgent, short needs with a clear exit. See caveat loan vs second mortgage for the trade-offs.
Bridging loans
Business bridging finance covers a timing gap, such as buying new premises before the old ones sell or waiting for a property settlement. The loan is repaid when the expected money lands.
Commercial property loans
Commercial property finance funds buying or refinancing offices, warehouses, retail units or industrial sites. Using other property as additional security can reduce the deposit you need.
Asset and equipment finance
With asset finance, the thing you’re buying is the main security. The lender registers its interest on the Personal Property Securities Register (PPSR), so you often need little or no other security.
Asset finance
Asset finance is the umbrella term for funding business assets through a loan, hire purchase or lease. Repayments are spread over the useful life of the asset, so it pays for itself as it earns.
Equipment and vehicle finance
Equipment and vehicle finance covers utes, vans, trucks, fleets and IT equipment for business use. It’s for commercial use only, not personal cars.
Heavy equipment and machinery finance
Machinery finance is built for yellow machinery, tractors, harvesters, excavators and plant, new or used, including private sales. A Canterbury dairy contractor adding a second tractor before silage season is a classic case.
Not sure whether to tie finance to the asset? Our asset finance vs unsecured loan comparison helps you decide.
Working capital and revolving finance
Some needs aren’t one-off. Wages, stock and supplier bills come round again and again, and revolving facilities are designed for that rhythm.
Working capital loans
Working capital loans fund the day-to-day: stock, wages, supplier terms and seasonal dips. They can be a term loan or a revolving facility. Use the cash flow gap calculator to size the hole you’re filling.
Business lines of credit
This revolving facility gives you a limit you can draw, repay and redraw. You pay interest only on what you use, which suits uneven, recurring needs.
Overdraft alternatives
When the bank overdraft is too small, gets cut or is pulled altogether, there are alternatives to a business overdraft that do the same job. Our cash flow loan vs overdraft comparison sets them side by side.
Invoice finance
Invoice finance, also called debtor finance, advances you cash against unpaid invoices. When customers pay on 60 or 90 day terms, it stops your money being stuck in their bank accounts.
Trade finance
Trade finance pays your suppliers or overseas manufacturers before your customers pay you. Importers and wholesalers use it to buy stock in bulk without draining cash.
Tax-related business loans
Tax debt is one of the most common reasons Kiwi business owners borrow. Inland Revenue adds late payment penalties and use-of-money interest on overdue tax, so clearing it fast often saves money.
IRD debt loans
An IRD debt loan pays off income tax arrears in one go, often directly to Inland Revenue at settlement. Compare it against an IRD instalment arrangement before deciding. The IRD debt calculator helps you see the cost of waiting.
GST and PAYE debt loans
GST debt loans target GST and PAYE arrears specifically. These are money you collected or deducted on IRD’s behalf, so Inland Revenue treats them seriously. Clearing them quickly protects the business. Our GST calculator helps with the numbers at 15%.
Provisional tax funding
Provisional tax finance spreads the cost of a large provisional tax instalment, and can work alongside tax pooling.
Purpose-built business finance
Some loans exist for a single job.
Business acquisition finance
Business acquisition finance funds buying an existing business or buying out a partner. Lenders look at the target’s profits, your experience and the security available.
Franchise loans
Franchise loans help with the franchise fee, fit-out and working capital to get a new outlet open, or with buying an existing franchise.
Business debt consolidation
Business debt consolidation rolls several expensive short-term debts into one loan with one repayment. It often eases weekly cash flow and makes the debt easier to manage.
Loans for particular kinds of borrowers
Some loan types are defined less by what they fund and more by who’s borrowing.
Small business loans
Small business loans cover the full range of finance for SMEs, from a $20,000 working capital top-up to a $500,000 property-secured loan.
Sole trader loans
Sole trader loans suit the self-employed, including tradies and contractors who aren’t set up as companies.
Startup business loans
Startup business loans are harder to get, because there’s no trading history. Realistic routes include borrowing against property equity and asset finance for equipment.
Low doc business loans
Low doc business loans suit owners whose financial statements are behind. Lenders use bank statements, GST returns or an accountant’s letter instead.
Bad credit business loans
Bad credit business loans are an honest path to funding when your file has defaults, arrears or past insolvency. Property-secured options are usually the most forgiving.
Private business loans
Private business lenders are non-bank lenders that move faster and take a more flexible view than the banks. For how they stack up, see bank vs private lender.
How do you choose the right type of business loan?
Work through these questions in order.
- What’s the money for? A specific asset points to asset finance. Tax arrears point to an IRD debt loan. General purposes point to unsecured or property-secured loans.
- How long do you need it? Match the term to the purpose. Short-term needs suit short-term loans; long-lived assets suit longer terms. Our short vs long term comparison explains why.
- What security can you offer? Property usually unlocks bigger amounts and sharper pricing. No property means unsecured or asset-backed finance.
- How fast do you need it? Unsecured and caveat loans are typically the quickest.
- What does your file look like? Bad credit or behind-the-times financials steer you towards property-secured or low doc options.
| If your situation is… | Look first at… |
|---|---|
| Own property, need $50,000 to $500,000 fast | Second mortgage |
| No property, steady trading | Unsecured business loan |
| Buying a ute, truck or machinery | Equipment or machinery finance |
| Customers pay slowly | Invoice finance |
| Behind on GST or PAYE | GST debt loan |
| Bank said no, credit is poor | Bad credit or property-secured loan |
| Need flexible, recurring access | Line of credit |
For a guided shortlist, try our loan matcher. For the bigger secured-or-unsecured decision, see secured vs unsecured business loans.
Which loan types suit which industries?
Different industries borrow in different patterns. Here are the combinations we see most often.
| Industry | Common needs | Loan types that often fit |
|---|---|---|
| Construction and trades | Materials, plant, retentions, slow progress payments | Equipment finance, working capital, second mortgage |
| Hospitality | Fit-outs, kitchen gear, winter gaps | Unsecured loan, equipment finance, merchant cash advance |
| Agriculture and farming | Machinery, seasonal income, stock | Machinery finance, bridging, property-secured loans |
| Transport and logistics | Trucks, fuel, RUC, long customer terms | Vehicle finance, invoice finance, working capital |
| Retail | Stock for peak seasons, store upgrades | Trade finance, line of credit, unsecured loan |
A Hamilton earthmoving contractor, for example, might use machinery finance for a new excavator, then a second mortgage on the family home to clear a GST bill, two different loan types for two different jobs. Mixing products like this is normal and often cheaper than forcing one loan to do everything. See all sectors on our industries page.
How do the costs compare between loan types?
Every loan is priced on the client’s individual circumstances, so we don’t publish rates. But the general pattern is predictable:
- Lower relative cost: loans with strong security and a clear repayment source, such as first mortgages and asset finance on a quality asset.
- Middle: second mortgages, longer unsecured loans with strong trading, and invoice finance with reliable customers.
- Higher relative cost: very short, urgent loans, caveat loans, merchant cash advances and unsecured lending to younger businesses.
Higher cost isn’t automatically bad. Paying more for a short loan that saves a contract, clears an escalating IRD debt or lands next day can be the cheapest option overall. What matters is the total cost compared with the alternatives, including the cost of doing nothing. Our guide to business loan interest rates explains what drives pricing, and the compare loan offers tool puts offers side by side.
What mistakes do people make when choosing a loan type?
- Using short money for long assets. Funding a ten-year machine with a six-month loan creates a cash crunch at the worst time.
- Using long money for short gaps. Paying interest for years on a gap that lasted weeks.
- Ignoring security you already have. Owners with home equity sometimes take expensive unsecured debt when a second mortgage would cost less.
- Stacking several small loans. Multiple repayments on different days are hard to manage. One well-structured loan, or a debt consolidation, is often better.
- Applying everywhere. Each formal application can leave a credit enquiry. Pick the type first, then make one matched enquiry.
For more pitfalls, see business loan mistakes to avoid.
How does LoansOne help you pick?
You don’t need to become an expert in every loan type. LoansOne arranges unsecured business loans from $20,000 to $500,000 and fast, flexible 1st and 2nd mortgages for business purposes from $20,000 to $500,000. An expert reviews every application and matches you to the right lender for your situation. Your details aren’t sprayed across dozens of lenders, and starting an enquiry doesn’t mark your credit file.
Next step
Whichever type of finance fits, the fastest way to find out is to tell us what you need. Apply in about 30 seconds, free and with no mark on your credit file, and an expert will review your situation before a matched lender makes contact. Or call 09-888 5252 and talk it through.
