Why does hiring create a cash gap?
A new person costs money from their first day but rarely earns their keep from their first day. They need training, they learn your systems, and the extra work they unlock takes time to invoice and get paid for. For a trade business, that might be a few weeks; for a professional services firm, it can be months.
Funding that ramp-up period is a perfectly sensible reason to borrow — as long as you’re honest about how long it takes.
What does a new employee really cost?
Here’s the list a friend would jot down with you, using the current New Zealand settings:
| Cost | What to allow for |
|---|---|
| Wages | At least the adult minimum wage, which rose to $23.95 an hour from 1 April 2026 (MBIE) — and realistically whatever the market pays for the skills you need |
| KiwiSaver | Employer contributions rose from 3% to 3.5% of gross pay from 1 April 2026, and are scheduled to rise to 4% from 1 April 2028 |
| ACC | Employer levies based on your industry classification |
| Leave | Annual holidays, sick leave, public holidays and any cover you need while people are away |
| Recruitment | Advertising, agency fees, your own time |
| Set-up | Uniform, tools, laptop, software licences, vehicle |
| Training | Your time and theirs before they’re fully productive |
Add it up per person, per month. That’s the number your growth has to beat.
How long until a new hire pays for themselves?
Be realistic. Map it out:
- Month one: mostly cost — recruitment, set-up, training.
- Months two and three: partly productive.
- After that: fully productive, if the work is there.
Your funding need is roughly the cumulative shortfall across that ramp-up, plus a buffer. If you’re hiring several people, stagger the start dates so the business isn’t carrying everyone’s learning curve at once.
Hire for the work you’ve already got queued, not the work you hope will turn up.
What are the funding options?
Unsecured business loan or line of credit. For businesses trading six months or more, based on turnover and bank statements. A line of credit fits well because hiring costs trickle out over several months.
Property-secured business loan. For bigger expansions — a new crew, a second site — a loan from $20,000 up to $1m secured on NZ property gives more room, and no financials are needed for the initial assessment.
No loan at all. Sometimes the right answer is staged hiring: bring on one person, let them pay for themselves, then hire the next. Slower, but debt-free.
What employment basics should I have sorted?
Every employee needs a written employment agreement. Employment New Zealand confirms that 90-day trial periods are now available to all employers — but only if agreed in writing before the person starts work, and good-faith obligations still apply. Get payroll set up properly, including payday filing with Inland Revenue, so PAYE never becomes a problem later.
How LendFriend helps
Tell us about the roles, the timing and the work you’re turning away. We’ll look at your situation and match you with a lender from our panel whose product suits the ramp-up — often a line of credit rather than a lump sum. Every loan is priced on your circumstances, and you decide.
Growing is a good problem. Start your enquiry and let’s make it an affordable one.
The honest bit
Borrowing for wages is only smart when the work is genuinely there. If you're hiring in the hope that demand will follow, test it first — overtime, contractors or a part-timer — before you take on debt and permanent employment obligations.