Using a non-bank lender isn’t a one-way door. Plenty of New Zealand businesses step outside the banks for a period, whether because of a decline, a deadline or a bruised credit file, then step back in when their numbers look stronger. The ones who do it smoothly treat it as a round trip from day one.
Why businesses leave the bank, temporarily
- The bank declined new lending or reduced a facility.
- The bank couldn’t move fast enough for a deadline.
- Accounts were behind, so the bank couldn’t assess.
- A credit event (default, arrears, IRD debt) put the business outside bank policy.
- The bank’s industry appetite changed.
Each of these is fixable, which is why the return trip is realistic.
Leg one: moving to a non-bank lender
Check your existing bank arrangements
Before taking new non-bank debt, review what you’ve already signed with your bank:
- Mortgage terms: many require consent before a second mortgage is registered.
- General security agreements: may restrict further security over business assets.
- Covenants and undertakings: some facilities require you to notify the bank of new borrowing.
Your lawyer and lending specialist will help check these. Breaching a bank covenant can create a bigger problem than the one you’re solving.
Be transparent where it matters
If your bank needs to consent or be informed, tell them early and plainly: what you’re borrowing, why, and how it will be repaid. Banks are used to it. What damages relationships is finding out after the fact.
Borrow for a defined job
Size the non-bank loan to the specific problem, such as paying out IRD, bridging a contract or buying stock, rather than as much as is available. A focused loan is easier to exit.
Leg two: fixing what caused the decline
This is the part people skip. While the non-bank loan does its job, work on the reason the bank said no:
| Decline reason | What to fix |
|---|---|
| Accounts overdue | Get financial statements finalised and keep management accounts monthly |
| Weak year in the numbers | Show a recovering trend with monthly management accounts |
| Credit default or arrears | Clear or settle it, and build a clean repayment record |
| IRD debt | Clear it or keep a tax arrangement current, and stay up to date on GST and PAYE |
| Industry appetite | Look for a bank or lender with appetite for your sector |
| Serviceability | Improve margins, reduce other debt, or reduce the refinance amount |
Leg three: refinancing back to the bank
Start early
Begin talking to the bank several months before your non-bank loan matures, not a few weeks. Bank processes take time, and your non-bank lender will want comfort that the exit is on track.
Bring evidence
- Up-to-date financial statements and current management accounts.
- A clean conduct record on the non-bank loan. Repaying it on time is itself evidence.
- Proof that the original problem is fixed, such as an IRD statement showing nil arrears.
Check early repayment terms
Know what it costs to repay the non-bank loan early, and when. Time the refinance to minimise any break costs.
Have a plan B for the exit
If the bank still says no, what’s next? A sale, a different bank, extending with the non-bank lender, or paying down from trading. The Reserve Bank’s 2026 report noted increased competition among lenders as conditions eased, so shopping more than one bank is worthwhile.
A round-trip timeline
Example scenario (illustrative only):
- Month 0. A Hawke’s Bay contractor is declined for a bank top-up because two years of accounts are overdue and there’s IRD debt. A property-secured non-bank loan pays out IRD and provides working capital.
- Months 1 to 4. The accountant finalises both years’ accounts. GST and PAYE are paid on time. The loan is serviced from trading.
- Months 5 to 7. The owner approaches two banks with current accounts, a clean IRD record and a clean conduct history on the non-bank loan.
- Month 8. One bank approves; the non-bank loan is repaid.
When staying non-bank makes sense
Not every business needs to go back. If a non-bank line of credit suits your cash flow, or the bank’s terms still don’t work, staying put can be the right choice. The goal is the best funding for the business, not a bank for its own sake.
Where we fit
We arrange property-secured business loans from $20,000 to $1m, unsecured loans and lines of credit. We’re happy to help you plan the exit back to a bank from the first conversation.