No-term business loans: repay in full when the exit lands

Most loans are built around a repayment schedule: borrow, then pay it back a little at a time. That works for many purchases, but not for situations where the money arrives all at once at the end. A no-term business loan is designed for those.

How no-term lending works

You borrow against property. During the loan:

• No principal is repaid on a schedule.
• Interest is either paid monthly or capitalised, meaning it’s added to the balance.
• The full balance is repaid in one lump sum when the agreed event happens.

There’s still a maximum term, usually somewhere between six and 24 months, so it isn’t truly endless. “No-term” really means no amortisation.

Who it suits

The best fits are businesses with a lump sum on the way:

• Property developers and builders who are paid on completion or sale.
• Businesses selling an asset, such as premises, a subsidiary or a property, that’s marketed but not yet sold.
• Owners waiting on a refinance that needs another year of accounts.
• Exporters and primary producers paid at harvest, sale or season end.
• Businesses awaiting a large settlement, such as an insurance payout or the sale of a division.

Who it doesn’t

No-term lending is risky if:

• The exit depends on trading improving rather than a specific event.
• The property equity is thin, so capitalised interest could eat into it quickly.
• There’s no realistic plan B if the event is delayed.

In those cases a loan with regular repayments, such as a second mortgage on a set term, may be safer.

Capitalised interest in numbers

Capitalising interest is convenient, but it compounds. Ask the lender for a schedule showing the balance at three, six, nine and twelve months. Compare that to the expected exit amount. If the exit is a property sale, deduct agent’s commission, legal fees and any other debts on that property too. What’s left needs to cover the loan with room to spare.

What lenders need to see

Item	Why
Valuation of the security	Sets the maximum loan
Evidence of the exit	Sale agreement, listing, refinance approval or contract
Timeline	When the exit is expected and how firm it is
Plan B	What happens if it’s late
Owner ID and legal advice	Standard for property lending

The firmer the exit evidence, the faster the approval and the better the terms.

How fast can it settle?

Because no-term loans are secured over property and assessed mainly on equity and exit, specialist lenders can move quickly. $20k to $250k is possible same day (property-secured), and larger amounts can follow within 24–48 hours once valuation and documentation are complete.

An illustrative example

A Queenstown builder has completed four townhouses. Two are under unconditional contract and settle in five months; two are still being marketed. Meanwhile, the builder needs $650,000 to start the next project before the trades move on to other jobs.

A no-term loan, secured over the two unsold townhouses with interest capitalised, provides the funds. When the first two sales settle, the construction loan is cleared. When the remaining townhouses sell, the no-term loan is repaid in full. No monthly repayments came out of the business during the build.

Keep the exit front and centre

Most problems with no-term lending come from optimistic exits. Be conservative with timing and price, ask what an extension costs, and read our guide on getting out of a short-term property loan.

Paying interest monthly or letting it build

Some no-term loans let you choose. Paying interest monthly keeps the balance flat, so the amount you owe at the exit is exactly what you borrowed plus fees. That’s the safer choice if the business can afford the monthly payment, because it protects your equity if the exit is delayed. Capitalising interest frees up cash during the loan, which is useful for projects that need every dollar before completion, but the balance grows each month. A sensible middle path is to capitalise for the first few months while cash is tight and switch to monthly payments once income starts. Ask whether the lender allows that switch and whether there’s a fee for it.

Partial repayments

If your exit comes in stages, such as several sales over a few months, ask whether you can reduce the balance as each one settles. Partial repayments cut the interest cost and release security sooner.

Talk to a person

Asking what’s possible doesn’t touch your credit file, and we don’t send your details around a list of lenders. A real person reads your enquiry, tests the exit plan with you, and calls you with an option that fits. Start your enquiry.