How a revolving facility actually works.
The mechanics behind the facility pages. How a limit is set and drawn, what interest and line fees are charged on, how a revolving facility compares with a term loan and with an overdraft, and why the consumer revolving credit mortgage is a different product entirely.
How a line of credit works
Almost every other business facility is a single event. A line of credit is a standing arrangement, and nearly everything that confuses people about it follows from that one difference.
Read onDrawdown and repayment mechanics
Interest on a revolving facility is calculated daily, which makes the timing of every drawing and every repayment a small financial decision. Across a year those decisions add up.
Read onInterest and fees on a revolving facility
Two facilities quoted at the same rate can cost very different amounts, because the rate applies to what is drawn and several of the charges do not.
Read onWhat lenders assess
Getting a limit and keeping it are different problems. The first is an application and the second is a pattern of behaviour, and most of what goes wrong happens at the second.
Read onLine of credit against term loan
Whether the money will be wanted again after it is repaid. Everything else about the comparison follows from the answer, including the price.
Read onLine of credit against overdraft
An overdraft and a line of credit calculate interest identically. What separates them is where the limit sits, and that turns out to change how businesses actually use them.
Read onRevolving credit mortgage against a business line
In New Zealand, revolving credit most commonly means a home loan feature. Using one to fund a business is a real and common decision, and it is a considerably bigger one than it appears.
Read onSecured against unsecured lines
Security lowers the rate and raises the limit, both by more than is commonly expected. It also exposes assets to a limit that never amortises, which is a different proposition from securing a term loan.
Read onWhere to start
Eight guides, in the order most people need them.
The facility pages answer what each arrangement is. These guides answer why the answers are what they are, and they are worth reading in roughly this order.
How a line of credit works covers the whole mechanism from approval to review, including what a limit is and is not. Drawdown and repayment mechanics goes underneath it into the daily interest calculation and why the timing of a transfer is a small financial decision. Interest and fees on a revolving facility takes the charges apart and shows why two facilities at the same rate can cost different amounts.
What lenders assess covers how a limit is set and, more usefully, how it is kept, because getting a facility and keeping it are different problems and most of what goes wrong happens at the second.
The four comparison guides answer the questions businesses actually arrive with. Against a term loan is the one that decides the instrument. Against an overdraft is the one that decides the provider. The revolving credit mortgage guide exists because that phrase means a home loan feature to most New Zealanders, and using one to fund a business is common and consequential. Secured against unsecured is where the money is.
How these are written
Primary sources, hedged numbers, no borrowed copy.
Every numeric or regulatory claim in these guides links to a primary New Zealand source the first time it appears. The Reserve Bank for rate context, the Companies Office for the Personal Property Securities Register, the legislation itself for statutory provisions, the Commerce Commission for conduct and disclosure, and Inland Revenue where tax arises.
Nothing here is paraphrased from a comparison site or from a lender’s marketing pages. That is a deliberate rule rather than a preference. Paraphrasing another publisher adopts their claims, including any that were never substantiated, and a claim adopted second-hand is still one this site would have to stand behind.
No rate levels, limit thresholds or approval timings appear anywhere on this site. They vary by lender, by security and by applicant, and a figure quoted on a page that stays up for months would be describing a market at a moment rather than an offer to a reader.
FAQ
About these guides
How often are these guides reviewed?
Each carries a last-reviewed date on the page and in the sitemap, and that date moves when the content is genuinely revised rather than on a schedule. Fee conventions, lender practice and regulation all move, so a stale date on a money topic is worse than no date.
Who writes them?
Each guide names its author and their role in the byline, and that name is emitted as a Person in the page’s structured data rather than as the site itself. On a money topic the identity of whoever stands behind the content is part of what a reader is entitled to see.
Do the guides recommend a facility?
No. They set out what each does and who it tends to suit, and stop there. The right facility depends on the usage pattern, the security available and the trading position, and a page recommending one without seeing those would be giving advice rather than information.
Do they recommend a lender?
No. Lenders are described generically, by the kind of institution rather than by name, because a specific comparison would need current pricing that cannot be substantiated on a page that stays up for months. The one relationship this site has is with Prospa, and it is disclosed on every page.
Why is there a guide about a home loan?
Because revolving credit in New Zealand most commonly means a home loan feature, and a great many small businesses are actually funded that way. Serving that reader honestly means explaining the difference rather than pretending they meant something else.
Why do the tax and legal points defer to advisers?
Because the treatment genuinely depends on facts this site cannot see. The scope of a security document, the effect of a guarantee and the treatment of interest all turn on specifics, and the solicitor and the accountant are the people with the whole picture.
Is anything here personalised financial advice?
No. Everything on this site is general information about how a class of finance works, which is what New Zealand’s financial advice regime calls class information. Personalised recommendations require a Financial Advice Provider licence this site does not hold.