Understanding your level of financial commitment

As a small business owner, it’s easy to love watching the takings from a particularly good week of trade or a big sale come flooding in.

As pleasant as this is, it will only ever tell half of the story unless you’re also closely watching what debts, bills and other financial commitments are coming due.

“New and small businesses can be very vulnerable to cash flow issues resulting from not understanding their level of financial commitment,” says Arpit Nagpal, a registered financial adviser from Aarit Finance Limited.

“Many people see an opportunity and jump on it, without working out if it’s a suitable opportunity, whether they can commit to it long-term and how they will manage their financial commitments as a result.”

Financial commitment and cash flow

Financial commitments are pledges to meet certain expenses in future. They can include your rent, utilities, insurance, loan repayments and tax bills.

Inland Revenue Department (IRD) spokesperson, Gay Cavill, says when small businesses have a good understanding of their financial commitments, they are better able to plan, expand and succeed in business.

“Knowing financial commitments that relate to your specific small business industry, your business cycle and the stage of your business, will see your business better placed to meet its commitments as they fall due,” says Cavill.

Nagpal adds that being well aware of your financial commitments – and limits – will usually translate into a business that boasts a healthy cash flow.

“If you’ve got a liability coming up in a few months’ time or a year, you need to be thinking ‘how much funds do I need and how can I achieve that?’” says Nagpal.

A 5-step financial commitment planning process

Here’s how Nagpal recommends businesses plan for regular financial commitments in five simple steps:

  1. Identify your financial commitments: make a list of all business activities that trigger financial responsibilities. This could include employing staff (wages and super), opening your doors (rent/mortgage repayments, insurances, utilities and subscriptions) and tax obligations.
  2. Save the dates: identify when each of these obligations is due, set yourself reminders. (Here’s an infographic with the key 2019-20 end of financial year dates you need to know).
  3. Do your sums: next you need to calculate how much each of these financial responsibilities is going to cost you. Adopting good record-keeping practices and leveraging digital accounting software, can help you to regularly estimate the cost of your obligations. Review your obligations every quarter or six months. And keep a buffer for unexpected expenses.
  4. Set aside funds: separate your business finance from your personal finance and dedicate a certain business account (or accounts) to meeting your financial commitments. Regularly move the estimated cost of obligations into that holding account. Nagpal says strategies for meeting commitments can include ramping up your savings and finding new opportunities when business is quiet.
  5. Pay on time: avoid penalties – and take advantage of potential discounts – by paying on time.

Keep a close eye on your financial obligations

As a small business owner, it can be tempting to focus on the sexier parts of your business: the marketing, the networking, the graphic design, the website tinkering.

However, all too many businesses overlook the importance of cash flow, budgeting and planning, and by the time it’s finally caught their attention it can be too late.

“It’s important to know when to seek assistance, funding and/or investment into your business before things start to go wrong,” Cavill says.

Nagpal adds: don’t be afraid to reach out for help.

“Sometimes you need to raise a flag to say ‘yes I need help’,” he says.

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.

Bookkeeper vs accountant: What’s the best choice for your small business?

If you’re looking to enlist a professional to help your small business sort out its financials for the first time, then congratulations, you’ve likely done more than a few things right to get this far.

But how do you determine what level of financial assistance your small business truly needs? Should you turn to a bookkeeper, an accountant or both?

Well, before making a decision on the bookkeeper v accountant debate, the first step is to understand the differences between the two roles and how each professional can assist your small business.

“A lot of people tend to think that bookkeeping and accounting are one and the same,” says Samantha Priday, Director of bookkeeping service Solving Accounts Matters, “and although we tend to work towards some of the same goals, our daily tasks can be very different.”

What does a bookkeeper do?

Bookkeeping is the process of recording a business’s daily transactions in a consistent way, explains Priday.

That can include completing payroll, recording financial transactions, producing invoices, maintaining and balancing subsidiaries, general ledgers and historical accounts, as well as posting debits and credits.

“A bookkeeper can play an essential role in the upkeep of a business to make sure everything is being run smoothly, bills are getting paid on time, staff are being paid correctly and IRD filings are completed in a timely manner,” Priday says.

She says one situation where a business owner may opt for a bookkeeper over an accountant is when they’re just starting out – the bookkeeper can help if the business owner has limited business finance knowledge or is too busy growing the business.

“A bookkeeper can help them keep records of their daily transactions in order to stay compliant, and then at the end of the financial year they may assign an accountant to help with tax filings,” Priday says.

Cost: Many bookkeepers will offer monthly retainer packages between five hours (about $250) and 40 hours (about $1500­-$2000). Generally, the more hours you require, the lower their hourly rate.

What does an accountant do?

An accountant takes more of a strategic approach to your business, explains Chris Mercer, Managing Director at MBP Advisors + Accountants, which also runs a bookkeeping service.

“We review, either on a bi-monthly or quarterly basis, everything that’s done by our clients’ bookkeepers. And we use that data to have strategic conversations with businesses about the trajectory of their cash flow or the way they’ve worked towards their business goals for the year,” he says.

“We also use that reliable data at the end of the year to produce official financial statements and tax returns.”

Mercer adds that accountants are generally going to be more highly trained in the area of tax compliance.

“That said, a bookkeeper also has to have a high degree of working knowledge in tax because they’re going to be doing the coding and classifying of transactions that will have an impact on GST and income tax,” he says.

Priday says small businesses generally consider enlisting the services of an accountant when they start employing more staff members, or need specialised reporting and analysis completed.

“An accountant can be very helpful when a business owner is looking to upgrade or improve how their business runs,” she says.

“The accountant will supply meaningful, relevant, reliable and accurate financial information that will allow the users of that information to make informed judgements and decisions.”

Cost: Accounting firms may charge a fixed monthly fee for their accounting services, generally ranging from $100 to $400 per month, or a casual rate between $100 and $300 per hour.

Best of both worlds

As you’ve probably worked out, the two roles complement one another and it’s not uncommon for many small businesses to employ the services of both.

“A good bookkeeper will attach evidence to transactions, which most small business owners don’t do, so if the accountant has ever got any queries, the information is all there,” Mercer says.

Mercer recommends checking that the bookkeeper is a member of The Institute of Certified NZ Bookkeepers (ICNZB). You can also search for a bookkeeper near you on that site.

To find an accountant near you visit The Accountants and Tax Agents Institute of New Zealand (ATAINZ) or the New Zealand Chartered Accountants (NZ CA).

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.

How to improve your credit score

It’s the sort of thing that is rarely front of mind, but a poor credit profile can put the brakes on a business looking to grow, limiting your access to business finance or making it more expensive.

It’s common for your credit history to be checked when you’re seeking a business loan to purchase say new machinery or fund a business expansion, adds Business Development and Performance Coach Gaylene Hughes, from JDI Business Coaching.

“In the event that you’re buying an asset, a good credit history may mean you can borrow at lower interest rates when the need arises,” says Hughes.

“It’s important to remember that your personal and business credit history are linked and follow you.”

What is a credit profile

It’s best to think of your credit profile by breaking it up into the following two categories:

Credit report – contains information about your credit history including your credit score, current borrowings, all the times you’ve been given credit by a bank or company, unpaid or overdue loans, court judgments against you, and payment and default history.

Credit score – this score is calculated based on your credit report. Each credit reporting agency has its own formula that usually ranges from zero to 1000, but sometimes as high as 1500. The higher the score, the better.

In New Zealand, there are three main credit reporting companies: Centrix, illion and Equifax.

It’s free to get a copy of your credit report, but like most things in life, if you want the information quickly, you’ll need to pay for it.

How to improve a poor credit score

In New Zealand, you have the right to ask for a copy of your own credit report, and check and correct information that’s wrong.

You can request a copy of your report as often as you wish, and credit report companies are obligated to provide it without too much delay. They can charge a small fee if you want the information within three working days, but not more than $10.

If you unexpectedly find out you have a poor credit score, the first step is to look for mistakes and get them corrected.

If you believe that your poor credit rating is the result of fraud, you also have the right to ask that your credit file is ‘frozen’ and not released to anyone without your permission. You can then complain to the credit reporting company.

The Office of the Privacy Commissioner explains that freezing your report should make it more difficult for a fraudster to obtain new credit in your name, as credit providers will usually not grant new credit when they’re unable to do a credit check.

If your poor credit score is not the result of a mistake or fraud, improving your credit score might take time.

Indeed, a default can stay on your credit record for up to five years, even after you have paid the amount in full.

Rest assured though that credit reports include both positive and negative credit history, so there are steps you can take to improve your credit score over time.

8 tips for improving your credit score

Hughes shares her eight tips for improving your credit score:

  1. Pay bills and make loan repayments on time. “Set up weekly or monthly automatic payments if you can, from an account that’s harder to access.”
  2. Check for mistakes. Everyone makes mistakes, including credit reporting agencies. So make sure they don’t negatively impact your business by checking your credit report for errors.
  3. Manage your cash flow. “It’s important you understand your cash flow and avoid any penalty charges, especially for unpaid or partially paid PAYE, GST and tax to the Inland Revenue,” Hughes says.
  4. Transparency. “If you do get into trouble with creditors, talk to them. They’ll possibly be open to putting a payment plan in place: better to be paid something than nothing.”
  5. Don’t maintain more debt than you need: You shouldn’t be scared of debt, but too much can be your undoing. “Live within your means. Don’t be swayed by sales talk or a ‘special’ that’s just too good to be true. That can result in overcommitting to things you can’t pay off.”
  6. Consolidate. “If you have a credit card, ideally pay it off each month. If you have more than one credit card, consolidate the debt onto one card then cut the others up. Carefully manage any corporate credit cards within the business by regularly reviewing and paying these.”
  7. Know your numbers. “What’s your income and what are your regular outgoings? Live within your means where possible and get some budgeting advice – it’s amazing where you can make savings.”
  8. Follow up debtors. “Regularly follow up people who owe you money and remember it’s not a good thing to have too many eggs in one basket – do work for more than one customer.”

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

Infographic: 2019-20 end of financial year dates you need to know

For something that happens every year, the end of financial year (EOFY) period has a rare power to catch small business owners by surprise.

But getting ahead of the key tax year dates that NZ small business owners need to know will do more than just reduce your stress – it can potentially save you money as well.

2019-20 tax year dates you need to know

NZ’s financial year period

In New Zealand, the financial year, or tax year, is from 1 April to 31 March.

“The majority of businesses have this and it is known as the ‘standard’,” explains Geoffrey Hughes, Director at Hughes Judd Accounting.

“You can apply to change from the usual financial year to a ‘non-standard’, which will be considered on a merit basis. For example, many farming and agricultural businesses have different tax dates due to the seasonal nature of their business.”

Too many businesses leave it too late

Hughes says his business is often approached by new clients who are being followed up by Inland Revenue (IRD).

“The consequences, apart from IRD financial penalties, is possible loss of extended filing times going forward and an unexpected tax bill,” he says.

Stuart Ruddell, Director at JBM & Associates Limited, says the number one reason new clients approach his business is that they’ve left EOFY tax obligations too late.

The financial penalties of ignoring tax obligations

Inland Revenue currently charges $50 or $250 anytime you file a tax return late, depending on your circumstances, says Ruddell.

“On top of that, if you’re late filing the return you will be late for payment,” he explains.

“This then adds on Use of Money Interest of 8.35% (per annum), but you also get late payment penalties, which could be 5% (per annum) of the due amount during the first month and then 1% (per annum) of the tax due every month thereafter.”

Meanwhile, Hughes says, if you’re going to be late you should contact IRD prior to your tax deadline.

Of course, it’s better to be on time than it is to ask for forgiveness for being late, so make sure you mark the above key EOFY tax year dates in your calendar.

If you need some extra funds to grow your business in the new financial year or to get on top of your tax payments, talk to Prospa about how we could help meet your business finance needs. 

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

Business loan or personal loan? Options for funding your small business

Small business owners often use their own money or personal finance to grow their operation. Business funding, however, can be a more attractive alternative – for many reasons.

When you launch your own small business, your business and personal lives can easily become intertwined, as well as your finances. If additional funds are needed, small business owners often take out personal finance rather than business finance, as it may seem easier to access. But this is not always the case, with new alternative lenders providing fast and easy business finance solutions.

The risks of putting personal finance into your business

Accessing personal finance to fund your business can be fraught with danger.

“The biggest risk of injecting personal finance into your business is that you’re not going to derive any income, and you’re not going to be able to pay yourself back,” says Melissa Bailey, head of operations at Kiwitax, which has been working with small businesses in New Zealand for over 13 years.

“If you’ve obtained personal debt to be able to inject the business with the funds, then if the business isn’t going to derive an income to be able to service that personal debt, then you’ll be personally liable for that debt.”

Keeping your business finances separate

Ideally, says Bailey, any debt a business takes on should be in the name of the business, rather than personal debt in the name of you as an individual.

“It’s always best to have the separate entity and keep the finances separate,” she says. “If you’ve got a company, trust or partnership, then it would be best to have that finance under the name of that entity. It’s always tidier to have separate entities with their own separate liabilities.”

As well as being tidier and easier to manage at tax time, a good history of repaying debt can add value to a business in the longer term, as you’re building a strong credit history.

“If you have had finance and you have kept up with the repayments, then the creditworthiness of your business will increase,” Bailey says.

Taking on good debt

The word debt usually has negative connotations. However, Bailey explains it’s important to understand the difference between good debt and bad debt.

“Business is all about generating income,” she says. “Often you need to purchase assets, and the aim is to generate or derive a greater income from those assets directly. Or you may need to purchase stock in order to generate revenue,” she says.

“People don’t often have a big chunk of funds sitting aside to buy assets, and it’s not always a good idea to use that money in the bank account to pay for an asset anyway, because an asset is not claimable in the year in which you purchase it due to asset depreciation rules.

“Finance is really good for enabling the business to get assets from which to derive income – that’s good debt, it’s income-producing. That’s a real plus about finance.

“It’s the ability to buy assets without affecting your liquidity.”

Taking out business finance can also be tax-efficient, says Bailey, in that interest can be claimed as a deduction for the business.

“Any finance is, of course, going to generate interest charges,” she says. “However, all of those interest charges are claimable in the entity.”

If you’re looking to expand your business, buy new equipment or simply manage your cash flow during a quiet period, find out how a Prospa Small Business Loan could help. Get in touch on 0800 005 797 to discuss your options or find out more.

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

5 types of insurance small businesses should consider

Insurance. It’s not a word that immediately fills you with excitement. However, it’s an essential for many business owners as they seek to protect what they’ve built. After all, it could just take one criminal act, one accident, one mistake or one natural disaster to wipe all that hard work out in an instant.

Here’s what you need to know about small business insurance:

Why small businesses should seriously consider insurance

“Insurance is important for small businesses because the cost of something going wrong can be the difference between surviving and bankruptcy,” says Tim Grafton, CEO of the Insurance Council of New Zealand.

“Small businesses tend to run on leaner margins, so when something unexpected happens, there tends to be less capacity to absorb the cost.”

In New Zealand, there are no mandatory insurances, but Grafton says, “We recommend small businesses get commercial property insurance and business interruption cover at a minimum, as well as either public liability insurance or professional indemnity insurance, depending on the type of business in operation. Anyone operating digitally should also look into cyber cover.”

What are the main types of insurance for small businesses?

1. Commercial property insurance

If you own or rent a home, you’ll no doubt be familiar with home and contents insurance – commercial property insurance is a similar proposition, it’s just for your business. It can insure your building from damage from theft and fire, and many insurers also cover some natural disasters – just make sure you know what it is you’re covered for. If you have business premises, or you keep any business belongings in a workspace, this is something worth considering.

2. Business interruption insurance

What would happen if you arrived at your restaurant or retail store one morning to discover the premises flooded from the units upstairs? You can’t open, you’ll lose takings, and you still have the staff to pay. Business interruption insurance could compensate for some of those losses, and help you get back on your feet.

3. Public liability insurance

If you welcome customers onto your business property, or you’re working at a client’s site, public liability is an insurance you may need. It can protect you for incidents such as accidental damage to a client’s property, an injury suffered in your store or you inadvertently make someone ill.

4. Professional indemnity insurance

If you’re in the business of giving advice, or your work could possibly cause consequential damage for your client and they make a claim against you, professional indemnity insurance can cover you.

5. Cyber cover

If any part of your business is conducted online, cyber insurance is worth a thought. It can protect you from losses or claims arising from online risks, such as being hacked, loss of data or being held to ransom.

Insuring your future

As a small business owner, it’s vitally important to at least know what your risks are.

“By insuring your assets and covering yourself for business interruption and liability, you’re building your business’s resilience and ensuring it can continue operating into the future,” says Grafton.

“It’s worthwhile meeting with a broker as they can determine what cover a small business may need for its own circumstances and help find or tailor a policy just for that.”

Grafton also warns people operating their small business from home to not assume your home and contents insurance will be sufficient in the event of something going wrong.

“Anyone running a business out of their home may not be covered by their standard house and contents insurance, especially if they haven’t told their insurer that they’re working from their property,” he says. “We recommend calling your insurer to discuss your options and make sure you’re covered.”

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

9 crucial steps to cash flow success

Healthy cash flow means so much more than your bank balance’s bottom-line at the end of the week. It’s a small business’s ability to cover expenses, pay back debt and plan for the future.

These nine crucial steps will help put you on a path to cash flow success.

1. Budget well

A solid budget is the cornerstone of healthy business cash flow. Without it, you’re likely to miss any warning signs of problems on the horizon. So, schedule time to build a robust financial plan, including forecasting your revenue and expenses. Then factor in savings for future growth – you’ll also be well placed for seasonal business cycles, one-off costs and any unforeseen issues that come your way.

2. Spend wisely

You’re the boss. So, you call the shots when it comes to purchases, right? That means reining in the urge to spend big on impulse buys and seriously think through the pros and cons of every dollar spent. For example, a set of ergonomic office chairs might be advertised for a bargain price, but will they ultimately improve your bottom-line? If the answer is no, think twice about opening the purse strings.

3. Keep personal and business separate

Are your personal and business finances wrapped up together? If the answer is yes, you’re not alone. Historically, many small businesses have only been able to access funding through personal mortgages, loans or credit cards.

But the finance landscape has changed in New Zealand with alternative lenders now enabling businesses easy access to capital. And in order to have a strong grasp on your business’s cash flow and financial health, it’s important to keep your personal and business finances separate.

4. Be proactive

Stay on top of all your transactions, and keep in mind that most suppliers will be open to working with you on a payment plan to help pace your expenses. Burying your head in the sand when it comes to cash flow issues caused by overdue taxes, missed loan repayments or unforeseen bills is never the answer. A small business loan might be able to help bridge any gaps.

5. Chase invoices

Sounds simple, but we know finding the time to chase invoices is hard to come by. That’s where an online accounting system is worth its weight in gold, thanks to its ability to schedule reminders for overdue invoices weekly, fortnightly or monthly.

6. Cut back on stock

Holding onto old stock can suck the lifeblood out of any business. But there are ways you can shift it, while still earning some money. Consider offering customers a discount on bulk orders, host a stocktake sale or find out if stock that is simply unusable can be written off. And remember, clearing stock means freeing up space, which could lead to savings on extra storage.

7. Keep it lean

If you’ve been running your business for a while, you might have forgotten what you signed up for in terms of daily utilities, equipment hire or rent. Remind yourself. Speak to your accountant and see where you might be able to make some savings when it comes to your ongoing costs. Do you really need an office this size? After moving your business online, do you still require a shopfront? Keeping your overheads low is a great way to help keep you in the black.

8. Modernise payment systems

Make paying easy and convenient for your customer, otherwise you run the risk of losing the purchase or delaying payment. You can do this by clearly outlining links to payment options, including a credit card payment method seamlessly linked with your accounting system, and issue invoices online.

9. Limit low-profit products

Offering some products or services that generate little (or no) profit is a common tactic for most businesses, with such items known as a ‘loss leader’. Sure, they can help to secure new customers, but they do come at a price.

The key is to find the right balance. Check that the product’s price balances out your costs, taking wages, supplies and stock into consideration. And keep a close eye on things, making sure that those products that do come with a negative margin make up for it by generating ongoing interest from customers who turn into profit-makers.

Most small businesses experience cash flow highs and lows throughout the year. If you have cash flow concerns, contact Prospa to find out how a small business loan may be able to help.

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

How to manage small business loan repayments

For the vast majority of small businesses, being able to access cash at the right time is critical to keep your business going and growing.

A small business loan is one way to access that cash. Follow these tips to ensure you’re putting your best business foot forward when it comes to getting the most out of your small business loan.

Manage your cash flow carefully

Cash flow is important to the success of any small business – this you know. So it pays to keep it front of mind in the good times, and the bad, especially when you have loan repayments to consider. Keep a close eye on it by:

  • Issuing invoices on time – the earlier you invoice, the earlier you’ll get paid.
  • Regularly updating all other accounting and reporting – this will ensure you’ll notice any issues sooner and have them fixed faster.
  • Building a cash reserve, if possible – it’s always good to have something to fall back on should the unexpected happen. It will also stand you in good stead during seasonal slumps.
  • Projecting your cash flow well in advance – a cash flow calculator tool will be your best friend in this.

Get ahead of the game at peak times

So, business is booming? Great news. And while it may be tempting to celebrate, now’s the ideal time to consider paying more towards your loan. After all, it’s a move that will save you a significant sum of money down the track.

Let’s take Alison, for example. She’s a restaurant owner, has a $50,000 small business loan that she’s paying off at a rate of $600/week over 1 year and 9 months. Her business is doing well and she could pay more, but she’s just cruising at the agreed rate.

Alex, a mobile handyman, has a $50,000 business loan that he’s paying off at a rate of $600/week over 1 year and 9 months. His business is booming and he decides to add $200 to his repayments. This saves him $1,000 and he pays the loan off 5 months early.

Note: These are examples only and general in nature.

Keep a strong credit score

Good credit makes life much easier for a small business owner. Having a great credit report will open up more options when it comes to accessing finance, and has the potential to save you money in repayments.

Build and maintain a good credit score by:

  • Scheduling reminders to ensure bills are paid on time.
  • Limiting repayments by consolidating your credit cards.
  • Keeping a close eye on your credit cards by not hitting the limit.
  • Going over credit card bills with a fine-tooth comb so you can address any errors.

If your business is ready to take the next step, talk to Prospa today on 0800 005 797 or apply online for a small business loan.

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 advisers. Although every effort has been made to verify the accuracy of the information, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

6 questions to ask before getting a small business loan

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.

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.

3 reasons why you should consider an alternative lender for your next small business loan

Looking for a small business loan to grow your business? Have you considered an alternative lender?

There are various stages in the life of a business when additional funds may be needed to help the business grow – whether it’s to invest in new equipment or machinery, rent new and larger premises or simply to assist with cash flow during a quiet period.

But the prospect of obtaining finance through traditional means can be daunting – countless hours on the phone and in meetings with the bank and reams of paperwork to complete. The time commitment alone can put you off.

That’s where alternative lenders step in – often providing an intuitive online application process, with minimal paperwork and a fast approval process. As an alternative lender, Prospa’s application process indeed involves no paperwork and there’s the potential to have funds – anything from $5000 to $150,000 – in your account within 24 hours.

Alternative lenders are agile

By primarily operating online, alternative lenders have flipped the traditional borrowing process on its head. This enables us to focus on speed, flexibility and personal service – it keeps us agile, making us an ideal match for the agile environment of small business.

What’s more, rather than focusing on the business owner’s personal assets, we kick-start the lending process by assessing a business’s overall health and growth potential.

Alternative lenders are fast

Alternative lenders typically offer a quick online application process. When working with Prospa, for example, you’ll typically receive a same day response and, if successful, the funds could be in your account in as little as 24 hours.

For loans up to $100,000, no asset security is required to access the money, however Prospa does require a personal guarantee. As long as you follow your loan obligations (as detailed in your loan contract document), asset security will never be required. For loans of over $100,000, Prospa generally takes a personal guarantee and security in the form of a charge over assets.

Alternative lenders understand you

Alternative lenders inherently understand the dynamics and pressures that come with running a small business – because they are one. That common ground means we have a deep understanding of your challenges and your goals.

The result? Better, faster outcomes, and more personal service.

If you’re looking to expand your business, buy new equipment or simply manage your cash flow during a quiet period, find out how Prospa can help. Get in touch with one of our small business lending specialists on 0800 005 797 to discuss your options or find out more.

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, 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 or any loss or damage suffered by any person directly or indirectly through relying on this information.