A bad credit history usually has a reason behind it. A customer went under owing you money. A marriage ended. Covid knocked the business sideways, or a supplier price rise ate the margin for a year. For many New Zealand owners, a black mark on the credit file says more about a hard stretch than about how they run their business today. fundU offers bad credit business loans of $20,000 to $1m, secured on property and assessed by real people who look at the whole story.
We're a direct lender. There's no automated scoring engine deciding your fate and no panel of lenders to get past. Our credit team looks at the property, what the money is for, how it will be repaid and what's changed since things went wrong.
Why do good businesses end up with bad credit?
Because the last few years have been hard on a lot of Kiwi businesses, and credit files record problems long after they've been fixed.
The pressure has been real. Centrix reported 3,035 company liquidations in the year to May 2026, up 14%, with hospitality up 51% and retail up about 35%. Every one of those failures leaves unpaid suppliers and contractors behind, many of them small businesses that then fall behind themselves. A default recorded against you might trace back to someone else's collapse.
Common reasons we see for credit problems:
- A major customer that failed or paid months late
- A seasonal downturn that stretched the business further than expected
- A personal event, such as illness or separation, that pulled the owner away from the business
- Falling behind with IRD while trying to keep staff paid
- Guaranteeing a debt for a business that later failed
What counts as bad credit for a business loan?
"Bad credit" covers a wide range of things, from a single late payment to a history of defaults. Each carries different weight, and none is automatically a deal-breaker with us.
| Credit issue | What it means | How fundU looks at it |
|---|---|---|
| Late payments | Payments made after the due date | Usually minor if they've stopped |
| Defaults | An overdue debt listed by a creditor | Considered case by case; paid defaults help |
| Arrears with another lender | Behind on an existing loan or mortgage | Often something our loan can clear |
| IRD debt | Overdue GST, PAYE or income tax | Very common; we can pay IRD directly |
| Judgments | A court order to pay a debt | Needs explaining; can be cleared as part of the loan |
| Previous bank decline | A bank said no | Not a factor on its own |
| Past business failure | A previous company closed or was liquidated | We look at what's different now |
The key question for us is not "has anything gone wrong?" but "is this loan sensible now?" With property security and a clear exit, many owners with credit issues can be funded.
Timing matters too. A default from several years ago that has since been paid tells a very different story from a string of new ones in the last few months. Likewise, a director whose previous company failed during a downturn, but who has since built a steady new business, is in a different position from someone whose troubles are still unfolding. We look at the pattern, not just the listing.
If your own credit is the sticking point, a supporting party can sometimes help. A family member who owns property may be willing to offer it as security and act as guarantor. Their lawyer will explain the documents to them, and we assess the loan on the same four factors below.
How does fundU assess a bad credit business loan?
We look at four things, and the credit file is only one part of the picture.
- The property. Its value, what's owed on it and how readily it could be sold or refinanced. Equity is the foundation of our lending.
- The purpose. What the money will do. Loans that fix the problem, such as clearing arrears or paying IRD, are often the strongest.
- The exit. How the loan will be repaid, whether by refinance, sale, contract payment or cash flow.
- The story. What happened, what's changed and why it won't happen again.
Because our lending is secured on property, the equity carries a lot of the weight. That's why we can look past a credit score that would stop a bank's application at the first step. If a bank has already turned you down, our page on business loans after a bank decline explains what we do differently.
Be upfront about your credit history. We'll find it anyway, and an owner who explains it clearly is much easier to help than one who hopes it won't come up.
Should I check my credit report first?
Yes, it's worth it. Consumer Protection notes that you can get your credit report free from each of New Zealand's credit reporters, Centrix, Equifax and Experian, and checking your own file doesn't harm your score.
Checking first helps you:
- See exactly what a lender will see
- Spot mistakes, like a debt listed twice or a default that has been paid but not updated
- Ask a creditor to correct wrong information before you apply
- Prepare a short explanation for anything that's genuinely there
The government's guidance on how to check your own credit report walks through the steps. Enquiring with fundU doesn't affect your credit score, so you can talk to us before or after you've checked.
Can a loan fix the problems causing bad credit?
Often, yes. The most effective bad credit loans are the ones that remove the cause of the damage rather than adding to it.
That might mean paying out IRD so penalties and enforcement stop, clearing a default and an arrears balance in one go, or replacing several expensive short-term debts with one loan secured on property. Our business debt consolidation page explains how consolidation works, and our guide to business loans with bad credit covers the wider options.
If the business is under serious pressure, such as a statutory demand or a liquidation threat, act quickly. A company has 15 working days to respond to a statutory demand under the Companies Act 1993. Liquidation is rarely the best first step: liquidators charge fees and directors lose control of the outcome, while a property-secured loan can often fund the business out of trouble.
How do I apply for a bad credit business loan?
The process is the same as any fundU loan, and it starts with a conversation, not a credit check.
- Start your enquiry. It's free, takes a couple of minutes and doesn't affect your credit score.
- Talk to a lending specialist. Tell us what happened, what you need and what property you can offer as security.
- Initial assessment. Our credit team looks at the property, purpose, exit and story. No financial statements or tax returns are needed at this stage.
- Supporting information. We ask for relevant documents, such as bank statements, your IRD statement or details of the defaults.
- Approval and settlement. Lawyers complete the mortgage documents, and funds can be released in as little as 24 hours once approved in some cases. Where the loan clears debts, these can be paid directly at settlement.
Example scenario
A Rotorua retail business had two defaults on its credit file after a key wholesale customer went into liquidation owing about $70,000. The owners fell behind with a supplier account and their GST, and their bank declined a request for more funding. Trading had since recovered, with a new customer base and steady monthly sales.
The owners had a home valued at about $820,000 with a bank mortgage. fundU lent $110,000 on a second mortgage to clear the GST, the overdue supplier and both defaults, with capitalised interest for the first part of the term. With the arrears gone and the business trading well, the owners planned to refinance to their bank once their credit file reflected the change.
What you'll need
For the first conversation, have this ready:
- A short explanation of the credit issues and what caused them
- What's changed since then, and how the business is trading now
- The loan amount and what it's for, including any debts to be cleared
- The property offered as security, who owns it, a rough value and any existing mortgage
- Your business name and NZBN or company details
- A copy of your credit report, if you've already requested one
We may later ask for bank statements, your IRD statement or letters from creditors. We don't need financial statements or tax returns for the initial assessment.
A fair go for businesses with a past
Your credit history is part of your story, not the end of it. If you have property to offer as security and a sensible plan, fundU will give your application a genuine look. If your paperwork is also behind, our low doc business loans might suit.
It's free to enquire and it won't affect your credit score. Call 09 875 4577 or see if you qualify today.
Frequently asked questions
Can I get a business loan with bad credit in New Zealand?
Yes, in many cases. fundU considers business loans for owners with defaults, arrears, IRD debt and other credit issues case by case. Because our loans of $20,000 to $1m are secured on New Zealand property, we focus on the equity, the purpose and how the loan will be repaid rather than relying on a credit score alone.
Will making an enquiry affect my credit score?
No. Enquiring with fundU is free, takes a couple of minutes and doesn't affect your credit score. A lending specialist calls you back to talk through your situation. Any formal credit check only happens later, with your agreement, if you decide to go ahead with an application.
What credit problems does fundU consider?
We consider defaults, late payments, arrears with other lenders, IRD debt, judgments, previous bank declines and past business failures, each on its own facts. What matters most is the equity in the property, a sensible purpose, a clear way to repay the loan, and an honest explanation of what happened and what has changed.
How can I check my own credit report?
You can request your credit report free from each of New Zealand's credit reporters: Centrix, Equifax and Experian. Checking your own report doesn't hurt your score. It's worth doing before you apply for finance so you know what a lender will see and can correct any mistakes.
Does the property have to be in my name if I have bad credit?
No. The security property can be owned by you, your company, your family trust or a supporting party, such as a family member acting as guarantor. Where a guarantor is involved, they should understand what they're agreeing to, and their lawyer will explain the documents before anything is signed.
Can a bad credit business loan help repair my credit?
It can help indirectly. Using a loan to clear defaults, arrears or IRD debt stops new negative events being recorded, and keeping to the agreed terms afterwards builds a better track record. Over time, that can put you in a stronger position to refinance to a bank once the business is back on firm ground.
A practical next step
Ready to see what's possible?
Tell us what the business needs, when you need it and what property is available. A fundU lending specialist will call you back to talk it through — enquiring is free and won't affect your credit score.