Quick answer
A business line of credit is an approved limit your New Zealand business can draw on and repay as often as it likes, paying for the money only while it's in use. For trading businesses, unsecured limits typically sit between $5,000 and $500,000, sized on turnover and bank statements. With bank statements and ID ready, a limit can often be approved and available within 24 hours of applying.
Key points
- A revolving limit: draw, repay and draw again without reapplying.
- Unsecured limits are usually sized on turnover and six months of bank statements.
- Once it's open, money can move the same day you need it — the speed comes from setting it up early.
- Best for uneven cash flow, not for buying long-life assets.
- Typical unsecured limit
- $5,000 to $500,000
- Security
- Usually none; property can support larger limits
- Set-up time
- Often within 24 hours with documents ready
- Best for
- Wages, GST, stock and timing gaps
A line of credit is the closest thing business finance has to a fire extinguisher on the wall. You hope you won’t need it this month, but when wages, a GST payment and a slow-paying customer all collide, it’s already there. This page covers how a business line of credit works in New Zealand, how quickly one can realistically be set up, and when it’s the wrong tool.
What is a business line of credit, in plain terms?
It’s an approved limit — say $80,000 — that your business can draw against whenever it needs to. Draw $25,000 to cover payroll, repay it when a big invoice lands, and the full $80,000 is available again. You don’t reapply each time.
Most lenders charge for the money while it’s drawn, plus any facility fees set out in the offer. That makes a line well suited to short, repeating gaps rather than long, fixed purchases. business.govt.nz describes lines of credit in similar terms: you’re only charged interest on the credit you actually use.
How it typically runs:
- You apply once and the lender sets a limit based on your turnover and recent bank statements.
- Funds are drawn through an online portal or by request, usually landing the same day.
- Repayments reduce the balance and free the limit up again.
- The lender reviews the facility periodically and may raise or lower the limit.
How fast can a line of credit be set up?
The approval is the slow bit; drawing is quick. For an unsecured line, the lender mainly wants photo ID for the owners or directors, six months of business bank statements and your company or NZBN details. With those ready, our aim is to have the facility approved and available within 24 hours of your first application, and smaller limits can sometimes be open the same day.
Things that add time:
| Factor | Typical effect on timing |
|---|---|
| Missing months in your bank statements | Hours to days, until the gap is filled |
| Several business accounts not all supplied | Lender asks for the rest before deciding |
| Limit request above what turnover supports | Back-and-forth while the limit is resized |
| Recent defaults or IRD arrears not mentioned | Re-assessment once they surface |
| Larger limits backed by property | Title search, value check and a lawyer |
If you’d rather not wait to find out how your own situation stacks up, start a 60-second application and a specialist will tell you on the first call.
Who is a line of credit right for?
It suits businesses whose income and costs don’t line up neatly. Think of:
- Trades and construction, where materials are paid for weeks before progress payments arrive.
- Hospitality, with heavy wage weeks in summer and quieter takings in winter.
- Wholesale and retail, buying stock ahead of peak seasons.
- Professional services, carrying long debtor days on big clients.
It’s less suited to buying a $150,000 machine you’ll use for eight years. Funding a long-life asset from a revolving facility ties up the limit for months and leaves nothing for the next squeeze. For that, look at equipment and vehicle funding or a term loan.
What do lenders look at before approving a limit?
Unsecured lines are mostly assessed on how the business trades right now. Expect a lender to read your statements for:
- Average monthly deposits — the main driver of the limit size.
- Consistency — steady deposits are easier to lend against than one huge month.
- Existing commitments — other loans or daily debits already coming out.
- Dishonours and overdrawn days — a few are explainable; a pattern needs context.
- Tax position — IRD arrears aren’t automatically a no, but they must be disclosed.
An illustrative example: a Hamilton landscaping business deposits around $90,000 a month, with dips in winter. It has two years of trading, no property it wants to use, and a clean record. A line of credit sized at a fraction of monthly turnover could be a sensible fit, giving it room to fund winter wages and spring materials without a fresh application each time. (Illustrative only; every limit is set on the actual figures.)
Line of credit or a one-off loan — which is quicker in practice?
For a single, known need — say $40,000 for a GST bill due next week — a one-off cash flow loan and a line of credit take about the same time to approve. The difference shows up the second and third time. With a line already open, the next shortfall is handled in minutes, not another application.
A rough way to decide:
- One gap, one amount, clear repayment date → a short-term or cash flow loan.
- Recurring gaps of different sizes → a line of credit.
- A large amount and property available → a property-secured facility may give a larger limit.
How do I keep a line of credit working well?
A line works best when it’s treated as a buffer, not as extra income. A few habits help:
- Repay drawings as soon as the matching income lands, so the limit is free for the next gap.
- Keep a simple cash flow forecast; business.govt.nz has a free forecaster that does the job.
- Watch the drawn balance in the weeks before GST and provisional tax dates.
- Tell your lender early if trading changes. A limit review is easier before a problem than after.
Is your business a good fit for a line of credit?
If your business has been trading steadily, deposits regularly into a business account and wants a buffer that’s ready before the next squeeze, a line of credit is worth a conversation. You can check whether you qualify in about 60 seconds. Applying doesn’t trigger a credit check, your details go to one specialist rather than a queue of lenders, and you’ll talk with a real person about the limit that suits. Please answer the form as accurately as you can — turnover, time trading and any arrears — because that’s what lets us set the right limit first time and keep things inside the 24-hour aim.
Frequently asked questions
How is a line of credit different from an overdraft?
Both are revolving limits. An overdraft sits on your everyday bank account, usually with your main bank. A business line of credit is a separate facility, often from a non-bank lender, that you draw into your account when needed. Non-bank lines are typically assessed on recent trading rather than years of financials.
Do I pay anything if I don't use the limit?
That depends on the facility. Some charge only when funds are drawn; others have an establishment or account-keeping fee. Ask for every fee in dollars before you sign so you can compare like with like.
How fast can I draw money once it's set up?
Usually very quickly — often same day through an online portal. The time-consuming part is the first approval, which is why it pays to open a line before the pressure arrives.
Can a new business get a line of credit?
Unsecured lines generally need an established trading record visible in bank statements. Newer businesses with property may be better served by a property-secured facility.
Can the limit grow over time?
Many lenders review limits as turnover grows and the account is run well. Keeping repayments on time and statements tidy is the best case for an increase.