You can use an unsecured business loan to meet any short-term business need, such as paying tax instalments, boosting your cash flow or pursuing growth opportunities. Avoid using it for major, long-term purchases like plant or property, which could leave you with a financing shortfall when the loan expires.
Once you’ve decided on the most suitable type of finance, you then need to choose the right lender and loan product – and the choices can seem overwhelming.
There are scores of alternative finance providers out there, but some focus only on particular types of customer (such as businesses in specific industries, businesses with a minimum turnover or trading period, or SMEs with poor credit ratings).
- Find out if you meet their lending criteria (which will be different for every provider).
- Check who you are dealing with and whether they impose any restrictive conditions on their customers (alternative lenders are not as tightly regulated as New Zealand’s banks so you could end up locked into restrictive terms).
- Compare the fees and other important factors, such as the type of interest (fixed or variable) and the level of flexibility (your ability to make early repayments, redraw funds or terminate the facility).
- If in doubt, seek independent financial advice.