Can I get a business loan as a sole trader?

What lenders look at for sole traders

• IR3 income — net business profit after expenses, not gross revenue.
• Bank statements — 6–12 months of trading account activity.
• Personal credit file — your personal Equifax/Centrix/illion file is the primary credit signal.
• NZBN + GST — registration evidence + GST returns if registered.
• Trading history — typically 1–2 years for banks; alternative lenders may consider 6+ months.

Sole trader vs company — what changes

• Personal liability: Automatic for sole traders; opt-in (via guarantee) for company directors.
• Tax structure: Sole-trader income is taxed at personal rates; company profits taxed at 28%.
• Asset protection: Sole traders have no entity-level asset protection — your personal assets back the loan.
• Loan size: Sole traders can access smaller amounts than well-capitalised companies in equivalent industries.

Should you incorporate before borrowing?

Some sole traders consider incorporating before applying. The trade-offs:

• Forming a company adds compliance cost (annual return, separate tax filing) and needs at least 1 year of trading history before most banks will lend to it.
• Lenders to new companies almost always require a personal guarantee — you remain personally liable in practice.
• Incorporation can help with broader business goals (selling the business, bringing in shareholders, asset protection in non-loan contexts) but does not by itself improve loan approval odds.

Talk to your accountant before changing structure for borrowing reasons alone.