Bank statement business loans

Annual accounts tell a lender what happened last financial year. Your bank statements tell them what’s happening now. For many New Zealand small businesses, especially ones that have grown or changed recently, that’s a far more flattering and accurate picture. Bank statement lending puts your business account at the centre of the decision.

What a lender pulls out of your statements

Measure	What they’re looking for
Average monthly deposits	Business income, excluding transfers and loan advances
Consistency	Steady months, or a seasonal pattern that repeats
Overdrawn days	Rare and brief rather than frequent and long
Dishonours	Ideally none in recent months
Other lenders	Repayments being met, not too many lenders at once
IRD payments	GST and PAYE paid regularly or under an arrangement
Personal spending	Kept to a minimum in the business account

Lenders differ on the detail, but every one of them is asking the same question: can this business comfortably carry another repayment?

How the loan amount is worked out

Most bank statement lenders start from your average monthly deposits and then adjust for what’s already going out. Existing loan repayments, a pattern of overdrawn days or a recent drop in income all reduce the figure. A longer trading history and a clean account can increase it. For smaller unsecured loans, the result is often a share of one to two months’ deposits, but every lender has its own formula.

If you need more than your statements support, adding property as security, through a second mortgage, can lift the amount considerably.

Getting your statements loan-ready

1. Use one main business account for income and expenses. Keep savings or a GST holding account clearly labelled.
2. Bank all takings. Cash that never reaches the account can’t be counted.
3. Avoid dishonours. Keep a small buffer and check when direct debits come out.
4. Pay IRD regularly. GST and PAYE payments, or an instalment arrangement, show obligations are being met.
5. Move personal bills such as groceries, rent or school fees to a personal account.
6. Don’t take several short-term loans at once. Stacking is one of the strongest negative signals.

When statements tell the wrong story

Sometimes statements look worse than the business really is. A large customer paid late, so one month looks empty. A one-off asset sale inflated another. You moved banks part way through the year. Tell the lender. A short note explaining anything unusual saves questions and can change the outcome.

Bank statements and seasonality

Seasonal businesses, such as orchards, tourism operators, ski-field suppliers or summer hospitality, should provide twelve months of statements so the lender sees the whole cycle. Applying just before your busy season, with the pattern visible, often works better than applying in the quietest month.

An illustrative example

A Napier café owner wants $35,000 for a new espresso machine and refrigerated display. Her annual accounts are seven months old and show a slow first year. Her last twelve months of statements show deposits averaging $48,000 a month and climbing, with no dishonours and one existing equipment loan. A bank statement lender approves an unsecured loan on the statements alone, paid directly to the equipment supplier. Illustrative only.

Bank statements and your other paperwork

Statements are often combined with other light evidence. GST returns confirm sales. An accountant’s letter confirms income and tenure. Together they make a low doc loan application. If you have none of those but do have property, a no doc loan may suit better.

Bank statement loans for different structures

Sole traders often run business and personal money through one account. That’s workable, but expect the lender to ask which deposits are business income and to look harder at outgoings. Partnerships should provide the partnership account rather than each partner’s personal account. Companies should provide every account in the company’s name, including any separate GST or tax savings account, so the lender can see the full picture. Trusts that trade should provide the trust’s own business account. If you’ve changed structure in the last year, provide statements for the old and new accounts so the trading history is unbroken.

What happens after the statements are read

If the statements support the loan, the lender will usually run a credit check, verify ID and send a loan offer. Read the offer carefully, including how often repayments are taken and from which account. Weekly or fortnightly repayments suit some businesses better than monthly ones; ask what’s available.

Questions to ask before you link

• Which accounts and how many months does the lender need?
• Is the access read-only, and how long is it kept?
• Will they also run a credit check, and when?

Let your account make the case

Tell us how much you need and roughly what your monthly deposits are. Asking won’t mark your credit file, your enquiry isn’t passed down a list, and one person reads it and calls you to talk through what your statements are likely to support. Accurate deposit figures help us give you a straight answer. Start an enquiry.