Working capital loans: keeping the day-to-day funded

Profitable businesses run out of cash all the time. Not because they’re failing, but because money is sitting somewhere it can’t be spent yet — in unpaid invoices, on warehouse shelves, in a half-finished job. Working capital is the fuel that keeps the business running while that money makes its way back. When the gap gets too wide, a working capital loan closes it.

What is working capital, in plain terms?

Working capital is what you need to keep operating between paying out and getting paid. A simple way to see your own:

1. Days to sell stock (or complete work).
2. Plus days for customers to pay.
3. Minus days you get from suppliers.

The answer is your cash cycle — how long your money is tied up. The longer it is, and the faster the business grows, the more working capital you need.

Business	Typical pressure point
Builder or contractor	Materials and labour before progress claims are paid
Retailer	Stock bought months before peak trading
Wholesaler	Large orders, 30–60 day customer terms
Hospitality	Wages and suppliers weekly, revenue seasonal
Professional services	Staff paid fortnightly, clients pay monthly

How much working capital can I borrow?

For unsecured working capital, the amount is linked to turnover and how your bank statements look — typically $5,000 to $500,000. If you need more, or your statements don’t support the amount, property-secured working capital runs up to $5,000,000.

How fast can it happen?

• Smaller unsecured amounts: same day possible.
• $20k to $250k secured: same day possible.
• Up to $5m secured: 24 to 48 hours possible.

All of these depend on documents arriving quickly and the file being clean. The readiness check shows what’s left to prepare.

What’s the right structure for my gap?

Your gap	Structure to consider
One-off: a large order or a tax bill	Working capital loan
Recurring: every month or season	Line of credit
Driven by slow-paying customers	Invoice finance
Large, longer-term, property available	Secured working capital

What will the lender want to understand?

• The size and timing of the gap.
• Where the repayment comes from — customer payments, seasonal sales, a contract milestone.
• Existing commitments, including tax. Remember PAYE is payable by the 20th of the following month and GST periods have their own due dates — lenders will look at whether these are being met.

A clear purpose and exit plan answers most of this in a few lines.

How can I reduce how much working capital I need?

Borrowing is one answer to a working-capital gap. Shortening the cycle is another, and the two work well together.

• Invoice promptly. Every day between finishing a job and sending the invoice is a day added to the cycle.
• Tighten payment terms for new customers, and follow up overdue accounts on a set day each week.
• Offer easy payment. Online payment links and direct debits get money in faster than “please pay to the account below”.
• Negotiate with suppliers. Longer terms from a key supplier can free up as much cash as a loan.
• Trim slow stock. Stock that hasn’t moved in months is cash sitting on a shelf.
• Plan tax. Setting GST aside from each sale stops it being spent as working capital and then needed in a rush.

If you need funding now, start a quick enquiry — and keep working on the cycle in parallel so the next gap is smaller.

How do I work out the right amount to borrow?

Map the next few months week by week: money in from customers, money out to suppliers, wages, rent and tax. The lowest point on that map is roughly the size of your gap. Add a modest buffer for surprises, but resist rounding up dramatically — a request that matches a clear forecast is easier and faster to approve than one that looks padded. If you’re unsure, bring your rough numbers to the first call and the specialist will help you test them.

What are the warning signs that it isn’t a working-capital problem?

Working capital funding fixes timing, not profitability. If the business is losing money every month, borrowing to fill the gap will make the gap bigger. Signs to watch: margins shrinking, the overdraft never clearing, tax arrears growing despite steady sales. If that sounds familiar, talk to your accountant alongside any funding conversation.

What does the lender need to see for working capital?

The core pack — statements, ID and company details — plus a short explanation of your cash cycle: what you pay out, when you get paid and what the funds will cover. Aged debtor and creditor reports from your accounting software are especially useful.

Illustrative example: a growing wholesaler

Illustrative only. A Christchurch food wholesaler wins a supermarket listing that doubles its order volume. Customers pay in 45 days; suppliers want 14. The owner calculates a gap of about $160,000 for the first quarter. Bank statements support roughly half unsecured; the rest is arranged as a second mortgage on the owner’s warehouse. Both settle within two business days, and the first orders ship on time.

Is your money stuck in the cycle?

If cash is tied up in stock, debtors or work in progress, let’s look at freeing up what you need. Send a short enquiry — it takes about a minute and there’s no credit check when you first enquire. Your details aren’t spread around a host of lenders, and a real person calls to understand your cycle. Accurate turnover and timing figures help us get it right first time.

Fund my working capital →