Quick answer
Fast business funding usually costs more per dollar than a slower bank loan, because it's short, flexible and priced for speed. Whether it's worth it depends on what waiting would cost: IRD penalties and interest, a lost contract, a missed supplier discount, a failed settlement or stalled work. The fair comparison is the total dollar cost of the loan, including fees, against the total dollar cost of the delay.
Key points
- Compare total dollars, not headline percentages.
- Include every fee, and what early repayment really saves.
- Put a dollar value on the delay too.
- Fast now, refinance later is a common, sensible plan.
Every fast loan involves a trade. You pay more for money that arrives sooner, with less paperwork. That’s a good deal when the delay would cost more, and a poor one when it wouldn’t. The trick is to compare the two honestly, in dollars.
Why fast money costs more
Specialist lenders who settle in hours or days take on more risk and more work per dollar than a bank lending over 20 years:
- Shorter terms. Fixed costs like assessment and legal work are spread over months, not years.
- Less paperwork. Relying on statements rather than full financials means more uncertainty.
- Flexibility. Lending to businesses with tax arrears, credit history or tight deadlines.
- Speed. Staff, valuers and lawyers prioritising your file.
That’s why the cost per dollar is higher. It’s not a reason to avoid fast funding; it’s a reason to use it for the right jobs.
Step one: the total cost of the loan
Ignore headline percentages for a moment. Ask each lender for one number: the total you’ll repay, in dollars, minus the amount you receive. Make sure it includes:
| Cost | Questions to ask |
|---|---|
| Establishment or arrangement fee | Is it deducted from the advance or added to the loan? |
| Interest | Charged monthly, daily or capitalised? |
| Legal and valuation fees | Whose lawyers, and is there a cap? |
| Ongoing fees | Monthly account or line fees? |
| Early repayment | Does repaying early reduce the cost, and is there a fee? |
| Exit or discharge | Any fee to release security at the end? |
| Default and dishonour | What if a payment is missed? |
Then ask for the same total if you repay early, and if the loan runs a month or two longer than planned. Those three numbers tell you most of what you need to know.
Step two: the cost of waiting
Now do the same for the delay. Common costs of waiting in New Zealand businesses include:
- IRD penalties and use-of-money interest on overdue GST, PAYE or income tax, which keep adding up.
- Lost contracts. A head contractor or client moving to someone who can start now.
- Missed discounts. A supplier offering a significant reduction for paying this week.
- Failed settlements. Penalty interest, lost deposits, or losing the deal altogether.
- Idle time. Staff on site with no materials, a kitchen closed while equipment waits.
- Reputation. A missed payroll or a supplier put on stop.
Put a dollar figure on each, over the period you’d be waiting. Be realistic, not dramatic.
Step three: compare
If the cost of the fast loan is lower than the cost of waiting, speed is worth paying for. If it’s higher, either wait or find a cheaper way to bridge the gap: a supplier extension, an IRD arrangement, a part payment.
Often the best answer is both: a fast loan to meet the deadline, followed by a refinance onto cheaper, slower finance once the urgency has passed.
An illustrative example
A Tauranga kitchen joinery business is offered a bulk purchase of board and hardware for $120,000, which is $14,000 less than buying the same materials over the next four months as jobs require. The supplier needs payment by Friday.
A four-month unsecured loan would cost about $9,500 in total, including fees, with no saving for early repayment. The business compares: $14,000 saved against $9,500 spent leaves a $4,500 gain, plus the certainty of having stock on hand. They take the loan.
Six months later, the same business is offered a smaller deal: $40,000 of stock for a $2,500 saving. A short loan would cost more than $2,500. They decline and buy as needed.
Same business, same lender, two different answers. That’s the point.
A second example: tax
A Wellington consultancy owes IRD $95,000 across GST and PAYE. Penalties and use-of-money interest are adding up monthly, and the directors are uneasy about personal exposure on the PAYE. A second mortgage to clear the balance costs a known amount in fees and interest over 18 months. IRD’s charges, if the debt ran for the same period, would likely be higher, and the risk of recovery action would remain.
Here the loan’s cost isn’t just compared with IRD’s charges; it’s compared with the stress and risk of an unresolved debt. The directors decide the certainty is worth it.
Watch out for these
- “Low weekly repayment” quotes that hide a long term and a high total cost.
- Factor pricing, such as “1.2 times the amount borrowed”, which can’t be compared directly with annual rates. Convert everything to total dollars.
- Fixed-cost loans where repaying early saves nothing.
- Rolling short-term loans, where each new loan pays out the last with fresh fees.
- Upfront fees before approval, which are a warning sign.
Make the cheaper option faster
Sometimes the cheaper finance isn’t slower because of the lender, but because of missing paperwork. If you can get your statements, IRD statement, quotes and property details ready, a cheaper property-backed loan may land just as quickly as an expensive unsecured one. Our guide on how quickly a business loan can settle shows where time goes.
Check your options
The funding speed finder shows which routes can land in time. We’ll then give you the total cost of each in dollars so you can compare properly.
Questions to ask before you sign
Before committing to any fast loan, ask the lender to confirm in writing: the amount you’ll actually receive after any deducted fees, the total you’ll repay if the loan runs to term, the total if you repay at the halfway point, the total if you need an extra month, and every fee that could apply if something goes wrong, such as a dishonoured payment. Also ask whether a personal guarantee is required and what security will be registered.
Having those answers in writing does two things. It lets you compare offers on equal terms, and it removes the risk of an unexpected cost later. A lender that is reluctant to give clear dollar figures is telling you something useful.
Think about the next loan too
How you handle a fast loan affects the next one. Repaying on time, or early, builds a track record that can open cheaper options later, so plan a loan you can comfortably repay.
Get the real numbers
Asking what’s possible doesn’t touch your credit file, and we don’t spray your details around a list of lenders. A real person reads your enquiry and calls you with the total cost of each realistic option, in dollars, so you can decide whether speed is worth it. Start your enquiry.
Frequently asked questions
Why don't you publish interest rates?
Because they depend on the business, the security, the term and the lender. A published rate would be misleading for most people. We give you the total cost in dollars for your situation instead.
What fees should I ask about?
Establishment, legal, valuation, broker or arrangement fees, ongoing account fees, dishonour fees, early repayment fees and any exit or discharge fees.
Does repaying early always save money?
No. Some short-term loans charge a fixed total cost regardless of when you repay. Others reduce interest but charge an early repayment fee. Ask for the figure in writing.
How do I put a cost on waiting?
List what happens if the money arrives late: penalties, lost margin, contract damages, extra rent, staff idle time. Estimate each in dollars over the delay period.