Home » Blog » 6 questions to ask before getting a small business loan

6 questions to ask before getting a small business loan

Is opportunity knocking at the door of your small business? A small business loan may be just what you need to help you grow your business.

From new premises to new technology, small businesses are presented with opportunities all the time, and each has to be considered on its merits. If you’ve done your research and believe the idea’s got legs, but need finance to fund it, a small business loan could be the answer.

But first, here are six questions to ask yourself before taking on finance.

What’s the small business loan for?

While your business is something you’re likely emotionally invested in, it’s vital to remain objective about any opportunity that emerges. It is business after all. So before deciding whether a small business loan is a good option, be crystal clear on what you’re intending on using the money for and what positive impact it will have on your business.

How much finance do you need?

If your financial projections suggest your business will benefit from a cash injection, then the next step is to work out how much you’ll need. Remember to factor in any costs associated with what you’re using the loan for. For example, if you intend to buy a new vehicle or a new piece of equipment, it’s going to need insurance.

What’s your current position?

It’s one thing to know how much is in the bank today – it’s another to have an accurate picture of what’s coming up. Make sure your cash flow forecast is on point, all knowns are accounted for, and you are confident you can make the regular repayments, even in quiet periods.

How’s your credit history?

If you’re thinking about applying for a small business loan, it’s a good idea to check your credit report, so you can correct any mistakes, as this will impact your loan application. There are three credit reporting companies in New Zealand: Centrix, illion and Equifax. The New Zealand Government provides a handy guide on the best way to check your credit report.

Is there other funding that could help?

Is a small business loan definitely the right option? For example, if you’re a Kiwi business looking at a loan for R&D, you could be eligible for business growth funding through Callaghan Innovation – New Zealand’s innovation agency. Worth a look!

Make it easy to get a ‘yes’

At Prospa, it’s our mission to keep small business moving, providing small business loans of $5,000 to $150,000. To apply, all you need is identification (i.e. a valid Driver’s Licence) and some information about your business (including your trading time, ownership details and an active New Zealand Business Number). Note: to qualify for a Prospa Small Business Loan, you need to have been trading for at least six months, with a minimum monthly turnover of $6,000.

It takes 10 minutes to fill in the online form and we can often provide a response within one hour, as long as you’ve applied during standard business hours and allow us to use the advanced bank verification system link to instantly verify your bank information online.

So, the clearer the information you provide to us about your business, the easier it is for us to say ‘yes’.

Discover how a small business loan could help your business grow. Find out more or contact us on 0800 005 797.

Primary CTA illustration
With Prospa’s fast application and decision, this time tomorrow you could have the funds you need to set your business up for success.
Apply today
Primary CTA icon
With Prospa’s fast application and decision, this time tomorrow you could have the funds you need to set your business up for success.

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.

Keep reading

Infographic: Line of credit vs small business loan

04 July 2022 | 3 min read

Business loans and lines of credit offer different advantages to small business owners looking to invest in growth or cover cash flow gaps. Here’s the rundown.

View more

How a line of credit could benefit your business

14 June 2022 | 2 min read

How a line of credit can provide your business with access to funds whenever you need them.

View more

What is a business line of credit?

06 June 2022 | 3 min read

We explain what a business line of credit is and how they can help small businesses bridge cash flow gaps, quiet periods, or stock purchases.

View more

Subscribe to the Prospa Blog

Be inspired! Sign up to Prospa’s newsletter to receive tips, tools and small business success stories straight to your inbox.