Business loans. Lines of credit. Equipment finance. Banks. Fintechs. Alternative lenders. The list of funding options for NZ small businesses has never been longer. But more choice brings more complexity.

Working out which loan or financing option is right for you takes time, and as a business owner, that’s a luxury you rarely have. When opportunities appear, hesitation or a drawn-out application process can mean watching them slip away.

That’s what nearly happened to Cameron Knapp, owner of Cards Plus in Takapuna. When a large stock order became available earlier than expected, he suddenly had just one day to pay the invoice. He could have taken only part of the order, but Cameron knew that accepting less stock could make the supplier second guess his ability to handle future orders.

This guide helps you avoid that scenario. It breaks down the most common small business loans and financing options, outlines their pros and cons, and helps you choose the right fit — so when opportunity knocks, you’re ready to act.

Explore business loan and financing options in NZ

Many small business owners discover too late that not all loans are created equal. A product that works for buying equipment might not suit a short-term cash flow gap, and a traditional loan process can feel too slow when timing is critical.

Knowing your options upfront can save you time and help you act fast when opportunities arise.

1. Term loans (secured and unsecured)

Term loans provide a lump sum upfront, repaid in fixed instalments over a set period. These small business loans in NZ are often used for larger, planned investments and can be secured against assets or unsecured, depending on the lender.

  • Best for: Larger investments like renovations, equipment upgrades, or expansion.
  • Pros: Predictable repayments and access to higher loan amounts.
  • Cons: Traditional NZ lenders may require collateral, extensive paperwork, and long approval times
  • Good to know: If speed and flexibility matter, in New Zealand unsecured business loans from alternative lenders like Prospa can fund up to $150K without tying up your assets.

In their words: Cameron, Cards Plus

Cameron had grown Cards Plus from a small garage operation into a thriving local business supplying card and gift retailers across New Zealand. But getting enough stock at a reasonable price remained one of his biggest challenges for growth. When an exciting opportunity came up for a large order of quality stock, he was prepared to make the payment when expected. However, the invoice arrived much earlier than planned, leaving him with just one day to pay or risk losing the order.

“Prospa came to the party again. I spoke to our relationship manager and the loan was processed in under a day so I could pay for the order.” — Cameron Knapp, Cards Plus, Takapuna

Want to improve your chances of approval? Read our guide: 5 tips to help you get a small business loan approved

2. Business line of credit

A business line of credit gives you flexible access to funds up to a set limit, letting you draw and repay as needed. You only pay interest on what you use, making it a useful small business financing loan for managing cash flow gaps or covering unexpected expenses.

  • Best for: Managing cash flow fluctuations, emergencies, or seizing time-sensitive opportunities.
  • Pros: Reusable access to funds, interest charged only on drawn amounts.
  • Cons: Traditional lenders often have stricter eligibility requirements and may charge fees on unused funds. Prospa’s Business Line of Credit offers ongoing access, anytime via the Prospa App.

Learn more: Differences between a business loan and a business line of credit.

3. Equipment financing

This option is designed for purchasing vehicles, machinery, or other high-cost assets. The loan is secured against the equipment itself, meaning the lender can repossess it if you default.

  • Best for: Businesses needing to invest in expensive equipment without tying up other collateral.
  • Pros: Helps avoid large upfront costs and preserves cash flow.
  • Cons: Limited to equipment purchases only, asset depreciation risk.

Good to know: Prospa Business Loans can be used for equipment or other business needs.

4. Invoice financing

Also known as debtor financing, this solution lets businesses borrow against the value of unpaid invoices to improve cash flow without waiting for customer payments.

  • Best for: Businesses with long customer payment cycles.
  • Pros: Unlocks cash tied up in invoices, faster access to working capital.
  • Cons: Ongoing fees, not ideal for all industries.

Good to know: Prospa’s Business Loans provide fast access to funds without tying them to your invoices.

5. Business credit cards

Business credit cards offer a revolving line of credit for everyday expenses, often with rewards programs or cashback benefits.

  • Best for: Smaller, recurring purchases or emergency expenses.
  • Pros: Quick access to credit, rewards on eligible spending.
  • Cons: Higher interest rates, lower limits compared to loans, and not ideal for larger funding needs.

Good to know: Prospa Business Loans offer higher limits with structured repayments tailored to small businesses.

6. Trade finance

Trade finance supports businesses dealing in international trade by managing risks and cash flow challenges. It can involve letters of credit, bank guarantees, and other financial tools to facilitate import/export transactions.

  • Best for: Businesses engaged in regular international trade or large import/export deals.
  • Pros: Supports overseas transactions, reduces supplier risk.
  • Cons: Complex, often requires collateral, and may not suit most small businesses.

Heads up: Trade finance is generally more relevant for larger businesses with international supply chains. For most small businesses, options like term loans or lines of credit are more practical.

Business financing options at a glance

Option Best For Pros Cons Prospa NZ Advantage
Term loan Large, planned investments Predictable repayments, access to higher amounts Longer approval times with traditional NZ lenders, security often required Fast approval and no upfront security required up to $150K
Business line of credit Planned or unplanned cash flow gaps Flexible access to funds, interest only on what you use Harder to qualify with some lenders, fees on unused funds Easy ongoing access via Prospa App
Equipment financing Buying vehicles, machinery Helps avoid large upfront costs Limited to equipment purchases, asset may lose value Funds can be used for equipment or other business needs
Invoice financing Bridging long payment cycles Unlocks cash tied up in invoices, improves cash flow Ongoing fees, may not suit all business types Access funds fast without tying them to your invoices
Business credit cards Small, everyday expenses Quick access, rewards on eligible spending Higher rates, lower limits Higher limits, structured repayments, tailored for SMEs
Trade finance Import/export businesses Supports international transactions, reduces supplier risk Complex, often requires collateral Focused on supporting NZ small businesses locally

How to choose the best small business loan for your needs

Once you understand the different small business financing options, the next step is figuring out which one fits your situation. The right choice depends as much on your business’s goals and cash flow as it does on the products themselves.

Here are five questions to help narrow loan options for your business:

  1. How much funding do you need? Is it a small cash flow buffer or a larger investment like a renovation or new equipment?
  2. How quickly do you need the funds? Some lenders, like Prospa, can approve and disburse funds in as little as 24 hours, while others may take weeks.
  3. How long will you need to repay? A short repayment period can work for bridging gaps, but long-term investments may need extended terms.
  4. Do you prefer fixed repayments or flexibility? Fixed terms make budgeting easier, while a line of credit offers more control as your needs change.
  5. Do you have security to offer? Some lenders require collateral, while others provide unsecured small business loans that don’t tie up your assets.

Being clear on these points saves time when applying and helps you avoid settling for a financing option that doesn’t fit. If speed is critical, consider a lender like Prospa, who understands small businesses and can approve funds quickly.

Why NZ small businesses choose Prospa

For many small business owners, speed and simplicity can make all the difference when it comes to securing funding. That’s where Prospa stands out. Designed specifically for SMEs, Prospa Business Loans and Line of Credit are built around the realities of running a small business.

Here’s why thousands of New Zealand small businesses choose Prospa:

  • Fast access to funds: Apply online in minutes, with funding available in hours.
  • No upfront security required up to $150K: No need to tie up your home or business assets for most loans.
  • Minimal paperwork: Skip the long forms and complicated requirements of traditional lenders.
  • Tailored support: Work with a team that understands small business and can help you find the right solution.
  • Trusted by New Zealand SMEs: Prospa is rated Excellent on Trustpilot, with close to 8,000 positive reviews.

 

Find out how much you could borrow with Prospa’s Business Loan Calculator — no obligations, no impact on your credit score.

What you need to apply for a Prospa Business Loan

Getting started with Prospa is simple. Unlike traditional lenders, there’s no lengthy paperwork or detailed business plan required.

Here’s what you’ll need to apply for a small business loan in NZ:

  • Basic business details: Your NZBN and how long you’ve been trading.
  • Business bank account details: To get an instant snapshot of your business’s cash flow.
  • Funding amount and purpose: So Prospa can tailor the loan to your needs.

Once you’ve got these ready, you can apply online in minutes. Many business owners receive approval and funding the same day.

Have questions about funding? Speak to a Prospa specialist today to find the right solution for your business.