The short answer
Professional services business loans in NZ help accountants, law firms, engineers and consultants cover the gap between unbilled work, slow-paying clients and wages, and fund partner buy-ins, fit-outs and practice purchases. LoansOne arranges unsecured loans from $20,000 to $500,000 on cash flow, and 1st or 2nd mortgages from $20,000 to $500,000.
Why do profitable professional firms still run tight on cash?
Professional services firms sell time and expertise. That sounds asset-light and low risk, and on the profit and loss it often is. The cash is a different story.
You pay salaries every fortnight. You do the work over weeks or months. You bill at the end of a stage or at month-end. Then clients pay on the 20th of the month following, or later. The cash tied up in unbilled work and unpaid invoices is called lock-up, and it grows with every new hire and every big job.
The industry’s pinch points in New Zealand:
- Lock-up stretches with growth. A larger project means more unbilled hours before the first invoice goes out.
- Seasonal peaks. Accounting firms carry heavy workloads ahead of tax deadlines and after the 31 March balance date, while billing for that work lags.
- Tax lands in lumps. Provisional tax instalments and terminal tax arrive regardless of when clients pay.
- Big clients, slow payers. Corporates, councils and government agencies often have long payment cycles.
- Partner changes. Retirements and new partners mean capital moving in and out of the firm.
What do accountants, lawyers and consultants usually borrow for?
Working capital through lock-up. Covering wages and rent while WIP converts to cash. This is the bread and butter of cash flow loans, which are assessed on your trading deposits rather than property.
Partner buy-ins and buy-outs. An incoming partner pays for a share of goodwill and capital. A retiring partner wants paying out. Both need funding, often by a set date.
Buying a client book or practice. Accounting firms in particular grow by acquiring fee bases from retiring practitioners. See business acquisition finance for how purchases are structured.
Fit-outs and relocations. New premises, meeting rooms, IT, AV and furniture.
Tax obligations. Funding a provisional tax instalment so the firm doesn’t have to slow-pay suppliers. Our page on provisional tax funding explains how that works.
Which LoansOne options fit a professional services firm?
| Situation | Usually fits | What the lender looks at |
|---|---|---|
| WIP and debtor gap during growth | Unsecured or cash flow loan, $20,000 to $500,000 | Regular client payments into the business account |
| Partner buy-in with a deadline | 2nd mortgage on your home | The property; no financials needed, bad credit OK |
| Buying a retiring practitioner’s fee base | Unsecured loan, or mortgage-backed if larger | Combined cash flow, or property security |
| Office fit-out | Unsecured loan or 1st/2nd mortgage | Cash flow or property |
| IT, servers and furniture | Equipment finance | The assets |
Wondering whether a term loan or a revolving facility suits lock-up better? Our comparison of a cash flow loan vs an overdraft sets out the trade-offs.
How does a growing consultancy fund a big project? An illustrative scenario
This is an illustrative example, not a real client.
A Wellington structural engineering consultancy wins a large commercial project. It’s the biggest job the firm has taken on. To deliver it, the directors hire two engineers and a drafter and bring in a contractor for peak months.
The client pays monthly, on the 20th of the month following each invoice. That means the firm carries roughly seven weeks of extra wages before the first payment arrives, and a provisional tax instalment falls due in the middle of it.
The firm’s bank statements show steady, repeating payments from a broad client base over the past year. That’s a strong profile for an unsecured business loan. The loan covers the hiring ramp-up and the first two months of wages, and is repaid from the project’s monthly payments as they flow.
The overdraft stays untouched for genuine day-to-day swings. The project gets its own dedicated funding, sized to the job.
Want to size your own gap first? The cash flow gap calculator gives you a quick estimate.
Should a partner buy-in be funded personally or through the firm?
This is one of the most common questions incoming partners ask, and the answer depends on how the firm is set up and what you own.
Funding it personally. The incoming partner borrows in their own name, usually against their home, and contributes the capital to the firm. A second mortgage behind the existing bank home loan is a popular route because it needs no financial records and leaves the bank loan untouched. It also keeps the firm’s own borrowing capacity free for working capital.
Funding it through the firm. Where the practice is a company and the deal is structured as a share purchase, or where the firm is buying out a retiring partner, the business itself may borrow on its trading cash flow. That suits firms with strong, steady fee income.
| Personal (property-backed) | Through the firm (cash flow) | |
|---|---|---|
| What the lender relies on | Your property | The firm’s deposits |
| Financials needed | No | Bank statements |
| Bad credit | Considered | Assessed case by case |
| Effect on firm’s capacity | None | Uses some of it |
Your accountant will guide the tax and structure side. Once you know the shape of the deal, we can match the funding to it. For a side-by-side view of the two main routes, see unsecured business loan vs second mortgage.
What helps a professional firm get approved?
Lenders like professional firms with a broad client base and a clean payment history. They get cautious when one client provides most of the income or when the account shows dishonours.
To make the process smooth:
- Have three to six months of business bank statements ready.
- Bring a simple aged debtors list and a WIP schedule.
- Be clear on the purpose: a project, a buy-in, a fit-out or tax.
- Mention IRD arrears up front if there are any.
Every loan is priced on your circumstances: security, the strength and consistency of your fee income, credit history and term. LoansOne works to get the sharpest rate available for your situation. An expert reviews your application and matches you to the right lender, so your details aren’t sent to a long list of lenders.
Next step
If lock-up, a partner change or a fit-out is squeezing your firm, apply in about 30 seconds. It’s free and doesn’t mark your credit file. Or call 09-888 5252 to talk it through with an expert.
