What is a business line of credit?
Think of it as capital that sits on call. Instead of borrowing a fixed amount on day one, your business is approved for a limit. You draw what you need, when you need it — to cover wages in a slow week, pay a supplier before a customer pays you, or grab stock at a good price. As money comes back in, you repay, and the repaid amount becomes available again.
That draw–repay–redraw rhythm is what makes a line of credit different from a term loan. You aren’t paying for a lump sum that sits idle in the bank. You’re keeping a buffer ready for the weeks that need it.
Who is a line of credit built for?
Lines of credit work best for businesses where the money doesn’t arrive in neat monthly instalments:
- Seasonal trade — a Queenstown ski-hire shop, a Bay of Islands charter boat, a Hawke’s Bay orchard contractor.
- Slow payers — trades waiting on payment claims, consultancies on 20th-of-the-month-following terms, wholesalers supplying big retailers.
- Short-notice costs — a delivery van needing a new gearbox, a chiller that dies in January, an opportunity to buy discounted stock.
- Tax bumps — provisional tax, GST and PAYE landing in the same fortnight.
Most lenders on our panel look for a business that has usually been trading for six months or more, with business bank statements that show regular income. Sole traders, companies, partnerships and trusts can all apply, provided the funds are for business purposes.
How does drawing and repaying work day to day?
Here’s a simple illustration of the cycle for a hospitality business heading into winter:
| Month | What happens | Facility position |
|---|---|---|
| May | Shoulder season, wages still to pay | Draw part of the limit |
| June–July | Trade picks up with school holidays | Repay most of the draw |
| August | Supplier offers an early-order discount on spring stock | Draw again to take the discount |
| September | Peak weekends bring cash in | Repay; full limit back on call |
The figures behind each line depend on the business, but the pattern is the point: the facility flexes with your cash flow rather than forcing you into a fixed repayment schedule that ignores your seasons.
What do lenders look at?
Because most lines of credit are unsecured, the assessment leans on how your business actually trades:
- Turnover — how much comes through the business each month and how consistent it is.
- Bank statements — lenders read these closely for deposits, regular outgoings, dishonours and existing debt repayments.
- Time trading — usually six months or longer.
- Credit history — weaker credit is considered. A past default doesn’t automatically rule you out; the lender looks at the whole picture.
Decisions can sometimes be made the same day once the lender has what it needs.
When is a line of credit the wrong tool?
We’d rather tell you now than after you’ve applied. A line of credit is usually a poor fit if:
- You need a large one-off amount for something long-lived, like buying a building or a business. A term loan or property-secured loan usually fits better.
- Your business is very new, with little bank statement history.
- The gap isn’t temporary. If costs consistently exceed revenue, extra credit delays the problem rather than solving it.
If you need more than an unsecured limit is likely to cover, or you’d rather not provide financials, a property-secured top-up of $20,000 to $1m can be arranged against New Zealand property you or a supporting party already own. It’s a lump-sum loan rather than a revolving facility, but it can sit alongside a smaller line of credit.
How much does it cost?
We don’t publish rates, because there isn’t one number that applies to everybody. Every facility is priced on your business’s individual circumstances, and our job is to find the sharpest option available for your situation. Your lending specialist will walk you through the full cost before you commit to anything.
How to put a line of credit on call
- Enquire — the 60-second form asks what you need and roughly what your business turns over.
- Talk it through — a lending specialist calls you, asks about your cash flow pattern and explains which options fit.
- Share statements — usually recent business bank statements, often through a secure link.
- Decision and set-up — once approved, your limit is ready to draw on.
Want the mechanics in more depth first? Our guide on how a business line of credit works covers draws, repayments and limits in plain English.