FAQ: business lending & business loans for business owners
Business Loans Frequently Ask Questions
About The Paerata Small Business Loans
Tell me more about Paerata Small Business Loans
Paerata unsecured loans offers amounts of between $5,000 and $100,000. The terms range between 3 and 24 months and cash flow-friendly repayments that are either per day or weekly.
What makes the Unsecured Loan different from an ordinary company loan?
It is possible to apply to this Small Business Loan in under 10 minutes online or over the phone, receive an answer within the same day and the money could be on your account within 24 hours. Traditional business loans have an annual rate of interest together with additional fees and charges. This company loan is a cash-based loan and you’ll know in advance the amount you will have to pay, including any interest, fees or charges. Then, it is broken down into either weekly or daily installment amount.
What could be the Small Business Loan be used for?
The Small Business Loan can be used for virtually any business reason, such as the management of cash flow, company renovations, marketing, to purchase inventory or new equipment, for general working capital and much more. The loan is not available for personal reasons.
Concerning Larger Paerata Business Loans
What is the Larger Paerata Business Loan?
The Larger Business Loan is a larger loan size to support business expansion opportunities. Loans range from $100,000 to $500,000 over a fixed term up to 36 months. Repayments are either weekly or fortnightly depending on your situation.
How’s the Origination Fee calculated?
This Larger Business Loan has an Origination Fee that is calculated at 2.5% of the loan amount.
Am I eligible for the Larger Business Loan?
To be eligible for a loan that is this large the business needs to have been in operation for at least 3 years with an annual turnover of $700K. Your company must belong to a New Zealand Citizen (or Permanent Resident) over 18 years and have a New Zealand business (with a valid NZBN/IRD) and be able demonstrate at least 12 months of trading.
How can the funding be used for?
A larger business loan is a great option for almost every company need, including business remodeling, buying inventory or new equipment, as general working capital and so much more. The loan cannot be used for personal reasons.
Is the Larger Business Loan a secured loan?
Asset security is required for funding of more than $150,000. It is usually in the form of a charge over assets, which could also include the registration of this in the PPSR or making as a caveat.
A personal or director’s guarantee is a guarantee to repay a loan which is general in nature rather than specifying security over a particular asset. The person who is signing the ensure is personally accountable if the business borrower is unable to pay back the debt.
The Personal Property Securities Register (PPSR) is a central, national online register that is operated by the New Zealand Government. It contains security interests granted to individuals who own personal property (including the assets or goods). The PPSR permits prioritisation over property that is personal to be granted depending on the date that a security interest was registered.
An affidavit is an official document that is filed to provide the legal claim on a property.
What is a pre-approval minus Credit Check?
When you’re applying for the Larger Business Loan of more than $250,000 we may be able to provide an initial pre-approval to smooth out the process. We might be able to apply for this without a credit verification and within 6 hours of your initial application. The pre-approval process is based on an initial assessment, which involves answering a couple of financial well-being questions. It’s neither an offer nor a guarantee of finance. Acceptance without condition is subject to a full credit assessment and any offer that you are offered could have different terms.
Are I eligible for funding?
You may apply for a business loan if you
- are a New Zealand Citizen (or Permanent Resident)
- are over 18 years, have a New Zealand business (with a valid NZBN/IRD)
- can demonstrate at least 6 months worth of trade (for for the unsecured loan $5K – $100K) or three years of trading (for the Larger Business Loan $100K or $500K)
How do I apply?
The process for applying is fast and easy. Just fill out the online application in just a few minutes, and an experienced business loan specialist will call you to guide you through the process.
For a loan of up to $100,000 you’ll require the right identification documents (valid Driver’s Licence), a valid NZBN/IRD as well as at least 6 months of bank statements.
For larger loan sizes, you’ll also need:
$100K to $250K: Application details including credit consent, 6-12 months of IRD statements, bank statements (if you have a loan of more than $150K).
$250K – $500K: Details of the application, including credit consent and 12 months bank statement, an IRD statements as well as the two most recent years’ financial statements, plus interim financial statements for the current year, Aged Payables and Aged Receivables reports.
How quickly will I receive an answer?
For an unsecured loan ($5K and up) we typically offer an answer within one hour – as long as you make your application in quality company times and you allow us to make use of the advanced bank verification system link to instantly verify your bank details online. If you want to upload copies of your bank statements we can provide an answer in just 1 business day.
For Larger Business Loans ($100K to $500K) we may be capable of offer you with conditional pre-approval in around six hours. After you’ve signed your pre-approval document, you will need to wait between 2 and 3 days for the final approval, however this can be quicker based on the particular circumstances of each application. Some agreements have been approved in 24 hours.
The most efficient method is to ensure you apply during normal company hours, and let us use the modern bank verification to verify your bank information online. If you opt to send us copies of your bank statements , it can take a bit longer.
What is the time frame to receive the cash?
For the Small Business Loan ($5K up to $100,000) we can often provide an answer within an hour, provided you submit your request during normal business time and allow us to utilise the advanced bank verification system to instantly verify your bank details online. If you decide to upload copies of your bank statements, we are able to offer the decision within one business day.
If you are applying for Larger Business Loans ($100K to $500K) we may be in a position to offer you with conditional pre-approval within 6 hours. After you’ve signed the pre-approval form, it will take around 2-3 days for final approval, however it could be faster based on the circumstances of each application. Some offers have been approved in 24 hours.
The fastest method is to ensure you apply during standard business hours. You can also allow us to use the advanced bank verification system link to check your bank’s information online. If you upload the copies of bank statements, it takes a bit longer.
What is the maximum amount I can borrow?
We provide loans ranging from $5,000 to $500,000. When you make an application for a certain amount, we take into consideration a range of elements to determine the well-being that is your business and the level of repayments that your business is able to afford. The total amount of your loan will depend on the particular circumstances the company.
If you apply for a specific amount we will consider a number of aspects to determine how much we can lend you such as health for your company and the amount of payments your business is able to afford. The amount you receive from your loan will be determined by the specifics of your business.
Fees & repayments
How much do you charge for an company loan?
If you decide to request one of our business credit, we’ll assess the risk profile that you have for your business and offer an individualised offer including the amount of loan, the term and interest rates. This company loan is an upfront-priced loan therefore you will know in advance the total amount to be paid, including any charges or interest.
What determines the amount I pay?
Interest rates for company loans rates depend on a variety of factors including the amount of money borrowed, the business assets the funds will be used for and the sector the company is in, how long the company has been operating, what percentage of the business has enough cash flow to fund the loan, and the general well-being as well as creditworthiness business.
What are the costs?
There aren’t any hidden charges with our company loans, and you’ll know exactly how much it is that you need to pay and when, right from the day you sign up. There’s not any compounding interest and there are no additional charges (as as you make your payments on time).
We don’t charge an application fee. You can make an application for loans no cost upfront or obligation to proceed.
The Origination Fee covers the costs associated in establishing and managing the loan. This is only a fee if you decide to take the loan. The Origination Fee for us is 2.5% of the amount of the loan.
Do I have the option of paying off the loan in advance?
You can decide to repay the total amount of your loan at any point in time.
If you decide to pursue this option, please speak to our friendly company loan professionals. They’ll offer you with details on repayment and an early payment figure. It will be calculated using the total of the principal balance plus any accrued interest as of the time of early payment plus 1.5% of the principal balance plus any outstanding fees.
What is the process for repayments?
To ensure that you don’t miss payment dates and to align your cash flow schedule, we offer repayments that are either weekly or daily. These are automatically deducted from your nominated business account.
Security & privacy
Will my data be secure?
Making sure that your information is secure, and making it clear how we collect the information we collect, use, share and secure your information, is vital and is an essential aspect of our relationship with you.
Is it safe to link my bank account to the platform?
Yes. We utilise industry-recognised encryption techniques to protect your personal, sensitive and financial data and our funders are ISO 27001 qualified for our commitment to protecting the security of customers and privacy. We utilise a sophisticated bank verification system to immediately confirm your bank account information online so we can offer quick responses.
About business loans
How do you define asset-based lending (a secured loan)?
An asset-based loan is when an business owner makes use of assets they own to obtain the funding. The asset can be a personal asset like the family home, or an company asset like a truck or other piece of machinery.
The majority of lenders, even the major banks, prefer to secure loans against assets. If you’re having trouble paying back the loan then your asset may be offered for sale by the lender. In essence, it’s a way of securing additional financing using the value of what you already own.
Do I need security for a company loan?
For loans that exceed $150,000, there is no requirement for asset security upfront to access the money, however we do need an individual guarantee. So long as you comply with the terms of your loan (as specified in your loan contract document) and you are able to meet your obligations, asset security will never be needed. If you take out loans in excess of $150,000 generally, there is the option of a personal ensure and security in the form charges on assets.