If you don’t have property to offer as security, a lender has to answer one question another way: can this business comfortably repay? For unsecured business loans and lines of credit, the answer comes mostly from your bank statements. Understanding how lenders read them lets you prepare — and set realistic expectations before you apply.
Step 1: establishing turnover
Unsecured lenders typically ask for the last few months of statements from your main business account — often shared electronically through a secure bank connection rather than as PDFs. From those, they work out average monthly deposits, stripping out things that aren’t really trading income:
- transfers between your own accounts;
- loan advances from other lenders;
- one-off asset sales or capital injections;
- refunds and reversals.
What’s left is a proxy for turnover. It’s usually more current than annual accounts, which is why lenders like it.
Step 2: checking consistency
Two businesses can have the same average and look very different:
| Month | Business A | Business B |
|---|---|---|
| 1 | $48,000 | $12,000 |
| 2 | $52,000 | $95,000 |
| 3 | $50,000 | $8,000 |
| 4 | $49,000 | $70,000 |
| 5 | $51,000 | $40,000 |
| 6 | $50,000 | $75,000 |
| Average | $50,000 | $50,000 |
Business A is far easier to lend to. Business B might be perfectly healthy — seasonal, project-based or paid in milestones — but it needs explaining. If your income is lumpy, say why upfront. A Hawke’s Bay orchard contractor or a Queenstown tour operator has a pattern lenders recognise once it’s pointed out.
Step 3: existing commitments
Lenders look at what’s already leaving the account to other lenders:
- existing business loans and vehicle finance;
- merchant cash advances or revenue-based finance;
- buy-now-pay-later and card repayments;
- any regular payments to IRD under an instalment arrangement.
The more already committed, the less room for a new repayment. Several short-term lenders appearing in recent months can be a red flag — it may suggest the business is relying on stacked short-term debt.
Step 4: account conduct
How the account is run says a lot:
- Dishonours and returned payments — lenders count them.
- Days overdrawn beyond an agreed limit.
- Minimum balances — does the account regularly hover near zero?
- Gambling or unusual transactions in a business account raise questions.
A few months of clean conduct before applying can materially improve an application. Our guide on what lenders look for in bank statements goes deeper.
Step 5: the business itself
- Trading time. Usually six months or more. Longer histories help.
- Structure and registration. Lenders check the Companies Office register or NZBN details, and directors.
- Industry. Some sectors are seen as steadier than others.
- Credit history. Weaker credit is considered. A recent pattern of good conduct can outweigh older issues.
Putting it together: a worked example
A Wellington IT services company, trading three years:
- average monthly deposits after adjustments: $85,000;
- consistent month to month;
- one existing vehicle loan;
- no dishonours in six months;
- a paid-off default from four years ago.
This is a solid unsecured profile. The amount offered would depend on the lender’s own methodology, but the business would likely have several options, and a decision could come the same day.
Contrast a start-up Christchurch landscaping business, trading four months, lumpy deposits, two short-term advances already running. Most unsecured lenders would decline or offer very little. If the owner (or a supporting party) had property, a property-secured loan would be the stronger route — it doesn’t need six months of trading or financials for the initial assessment.
Why there’s no single “multiple of turnover”
You’ll see rules of thumb online suggesting a set percentage of monthly turnover. In practice each lender builds its own view from the factors above, and the figure moves with the purpose, term and repayment frequency. Treat any rule of thumb as a rough guide at best.
How to strengthen an unsecured application
- Run income through one main business account. Scattered income is harder to see.
- Avoid dishonours for a few months before applying.
- Clear small, expensive debts where possible.
- Separate personal and business spending.
- Know your purpose and amount — “$35,000 to fund a stock order that sells through by March” beats “as much as possible”.
- Explain seasonality with a short note.
Repayment frequency and what it means for you
Many unsecured business loans repay weekly, and some products repay daily. Lenders set this partly to match the way small businesses receive money. Before accepting, check that the repayment fits the way your deposits actually arrive — a weekly debit on a Monday may be fine for a café with weekend trade, but painful for a contractor paid on the 20th of each month. Ask for the repayment schedule in writing and map it against a typical month of your statements.
How Loanster helps
Unsecured business loans and lines of credit through Loanster are for businesses usually trading six months or more, assessed on turnover and bank statements. Weaker credit is considered and decisions are sometimes same day. If unsecured won’t stretch far enough, your specialist can compare a property-secured option.
Start a 60-second enquiry — no credit score impact.