To a lender, a business with 18 months of trading is a story with a beginning and a middle. A business with three months is a prologue. Neither is bad — they just need different kinds of evidence.
Understanding what lenders look for lets you prepare the right evidence, choose the right type of loan and avoid applying for things you’re not ready for yet.
The five things lenders assess
1. Trading history
For unsecured business funding, lenders generally want around six months of trading. They’ll use your business bank statements to see what comes in each month and size the loan to your turnover.
For property-secured loans, trading history matters less because the security does more of the work. Through Business Loanz, property-secured loans range from $20,000 to $1m and don’t need financials or tax returns for the initial assessment.
2. Account conduct
Lenders read your bank statements closely. They look for:
- regular, consistent deposits,
- bills paid on time (rent, suppliers, IRD, loan repayments),
- few or no dishonours and unarranged overdrafts,
- business and personal spending kept separate.
We cover this in detail in what lenders read in your bank statements.
3. Credit history
For a young business, lenders check both the business (if it’s a company) and the people behind it. Company credit reports can include Companies Office data, directors and shareholders, defaults, insolvency events, credit enquiries, and some Inland Revenue tax debt information where it meets reporting criteria (Centrix).
A past default doesn’t automatically mean no. Unsecured lenders consider weaker credit, and property-secured loans consider bad credit, defaults and arrears case by case. The key is being upfront.
4. IRD status
Being GST registered (if you need to be) and up to date — or on a formal arrangement — reads well. IRD debt that’s been ignored is a warning sign, because it tends to grow and IRD can deduct money directly from bank accounts. That said, a property-secured loan can be used to pay out IRD debt, so it isn’t necessarily a barrier.
5. Security and support
When trading history is thin, security fills the gap. That could be NZ property you own, or property owned by a supporting party such as a parent or business partner, as a first or second mortgage.
What else strengthens a young business’s application?
- Founder experience. Ten years as a chef before opening your café counts. So does a previous business you ran well.
- A clear purpose. “$48,000 for a sea-freight order from our existing supplier, landing in October for peak” is far more convincing than “working capital”.
- Contracts or pre-orders. Signed client agreements, wholesale orders or a retainer show future revenue.
- Industry context. A seasonal business that explains its seasonality is less alarming than one whose deposits just drop.
- Tidy structure. A company or sole trader with its registrations in order (NZBN, GST, Companies Office annual returns filed).
What lenders worry about
- Deposits that suddenly drop with no explanation.
- Lots of recent credit applications — it can suggest you’ve been declined elsewhere.
- Heavy reliance on one customer.
- Cash-heavy businesses whose takings aren’t banked.
- Borrowing to cover ongoing losses rather than a specific growth or timing need.
A readiness checklist
| Item | Ready? |
|---|---|
| Dedicated business bank account with all sales going in | |
| At least 6 months of statements (for unsecured) | |
| One-sentence purpose for the funds | |
| Quotes or invoices for what you’re buying | |
| IRD status known (registered, current or on arrangement) | |
| Any past credit issues noted, with a short explanation | |
| Property details, if a secured loan is an option |
Match the loan to your stage
- Not trading or under ~6 months: property-secured is the realistic route. See startup loans.
- 6–12 months: unsecured options open up, sized to turnover. See loans for new businesses.
- Over 12 months with steady trading: more choice, including lines of credit.
How a lender reads a young business: a worked example
Example scenario — generic and illustrative only. Imagine two Wellington businesses, both nine months old, both asking for funding.
Business one is a design studio. Deposits have grown from about $6,000 in its first month to around $18,000 a month now, paid by eight different clients. Everything runs through one business account, IRD is paid on time every two months, and there hasn’t been a single dishonour. The founder spent seven years at an agency before going out on her own.
Business two is an online homewares store with similar average turnover — but most of it came in one enormous month after a product went viral, followed by much quieter months. Sales and personal spending share one account, there are three dishonoured direct debits in the last quarter, and a GST return is overdue.
On paper their average turnover is the same. To a lender, they’re very different. The studio’s steady, diversified, well-run account supports an unsecured facility sized to turnover. The store’s lumpy deposits, mixed spending and IRD arrears make unsecured lending harder right now — though a property-secured loan could still be an option, and a few months of tidy banking would change the picture.
The lesson: lenders don’t just look at how much. They look at how reliably, how cleanly and how honestly the money moves.
Common myths about new-business lending
- “Nobody lends to businesses under two years old.” Unsecured lenders commonly work from around six months of trading, and property-secured loans don’t depend on trading history at all.
- “I need a formal business plan.” A clear, specific purpose and a realistic repayment plan matter more than a 30-page document, especially for the initial assessment.
- “One old default means an automatic no.” Weaker credit is considered for unsecured options, and bad credit is assessed case by case for property-secured loans.
- “Applying everywhere improves my odds.” A burst of credit applications can make you look riskier. Start with an enquiry that doesn’t affect your score.
How Business Loanz helps
We talk to young businesses every day, and part of our job is telling you honestly which lane you’re in. Send an enquiry — it takes about 60 seconds and doesn’t affect your credit score — and a lending specialist will call to talk it through.