Quick answer
A working capital loan funds the everyday running costs of a business — wages, stock, rent, suppliers — while it waits for customers to pay. In Australia it can be unsecured, sized on turnover, or secured against property for larger amounts. The right size is roughly the gap between when money goes out and when it comes back in, and complete applications can often be funded within 24 hours.
Key points
- Working capital is the money tied up between paying costs and collecting revenue.
- Size the loan to the gap, not to the biggest number a lender offers.
- Unsecured options suit smaller gaps; property security suits bigger ones.
- Growth often needs more working capital before it produces more profit.
- Unsecured range
- Typically $5,000 to $500,000
- Property-secured range
- $20,000 to $5,000,000
- Common uses
- Stock, wages, supplier terms, growth
- Credit check to enquire
- None
A business can be profitable on paper and still run short of money on a Tuesday. That gap — between paying your suppliers and staff and collecting from your customers — is working capital. A working capital loan doesn’t fix a business that’s losing money; it funds the timing, so a healthy business doesn’t stall while it waits to be paid.
What is working capital, in plain terms?
It’s the money tied up in running the business right now:
- Stock sitting on shelves or in a warehouse.
- Invoices you’ve sent but haven’t been paid for.
- Work in progress — jobs you’ve started and paid for but can’t bill yet.
- Less the bills you owe but haven’t paid yet.
When the first three outweigh the last, you need money to fill the gap. The faster you grow, the bigger the gap tends to be.
How do you size a working capital loan?
A simple method that works for most businesses:
- Count the days from paying for an input to receiving the customer’s money. Say you pay suppliers on delivery, hold stock for 30 days and customers pay in 30 days — that’s about 60 days.
- Work out your average daily outgoings — wages, stock, rent, the lot. Say $3,000 a day.
- Multiply: 60 days × $3,000 = about $180,000 tied up at any time.
Your existing cash covers part of that. The loan covers the rest — plus a sensible buffer for the BAS quarters, which fall due on 28 October, 28 February, 28 April and 28 July. That’s illustrative arithmetic, but it’s a far better starting point than asking for the biggest number a lender will approve.
| Business type (illustrative) | Typical gap driver |
|---|---|
| Wholesaler | Stock held plus 30–60 day customer terms |
| Builder or trade contractor | Materials and wages before progress claims |
| Manufacturer | Raw materials, production time, then terms |
| Hospitality | Smaller gap, but seasonal swings |
| Labour hire | Weekly wages, monthly client payments |
Which kind of finance suits working capital?
There’s no single “working capital loan” product; several types do the job:
- Business line of credit — best for gaps that recur. Draw and repay as needed.
- Cash flow loan — a lump sum sized on turnover, for a one-off gap.
- Unsecured business loan — a longer term for a structural increase in working capital.
- Property-secured loan — for bigger gaps, from $20,000 up to $5,000,000, often at a lower cost than unsecured options.
If you’re unsure which shape fits, that’s exactly what the first call is for. Tell us about your gap and we’ll suggest the quickest sensible structure.
How fast can working capital be funded?
Speed follows security:
- Unsecured, smaller amounts — same-day funding is possible with six months of statements ready.
- Unsecured, larger amounts — usually within 24 hours once statements, ID and possibly a BAS are supplied.
- Property-secured — $20k to $250k is possible on the same day; up to $5m is possible within 24–48 hours on a clean deal.
Our Funding Clock gives a quick estimate for your situation.
Why do growing businesses run short?
It feels unfair, but it’s arithmetic. When sales double, you usually buy double the stock and hire more people before the extra revenue lands. An illustrative example: an Adelaide wine distributor wins a new restaurant group as a customer. Orders rise by 40%, but the group pays on 45-day terms. For six weeks, the distributor is paying for far more stock and delivery hours while waiting on the first payments. A working capital facility sized to that six-week gap lets the business say yes to the contract without draining the account that pays wages.
The same logic applies to winning a big job — see big contract, upfront costs.
How do you avoid working capital debt becoming permanent?
- Track the gap. If it keeps widening without sales growing, something else is wrong — pricing, slow collections or stock that isn’t moving.
- Chase debtors. Shortening customer payment times by a week can free more money than a loan.
- Negotiate supplier terms. Longer terms shrink the gap for free.
- Repay in good months. Bring the balance down when the cycle allows.
The government’s business.gov.au cash flow pages have practical templates for forecasting, which pair well with this.
How do lenders assess a working capital application?
Mostly the same way they assess any trading business: bank statements, turnover, how the account is run and existing debts. For working capital specifically, they’ll also want to understand the cycle — why the gap exists and how it closes. A short explanation helps:
- What you buy or pay for upfront.
- How long it takes to turn that into sales or invoices.
- Your customers’ payment terms and how reliably they pay.
- What happens at the end of the cycle (customer payments arrive and the facility is repaid or redrawn).
If your business has a large debtor book — invoices owed by reliable customers — mention it. It shows the money is genuinely coming, which supports both the size of the facility and the speed of the decision.
For growing businesses, a forecast of the next three to six months makes the case even stronger, showing that the extra working capital is matched by extra sales rather than covering a shortfall.
Fund the gap and keep growing
If your business is sound but stretched by timing, working capital finance keeps it moving. Enquiring won’t touch your credit file, we work on your file ourselves rather than spraying it around, and a real person calls you to understand the gap. Give us honest figures for turnover and the amount — it’s how we size it right the first time. Apply for working capital.
Frequently asked questions
What's the difference between working capital and cash flow?
Cash flow is the movement of money in and out over time. Working capital is the money tied up in running the business at any one moment — stock, unpaid invoices and bills due. A working capital loan funds that tied-up money.
How do I work out how much working capital I need?
Look at how many days pass between paying for inputs and collecting from customers, then multiply by your average daily costs. That gives a rough size for the gap a loan needs to cover.
Should I use a loan or a line of credit for working capital?
If the gap is one-off, a loan works. If it recurs every month or season, a line of credit is often more efficient because you only draw what you need.
Can a growing business need working capital even if it's profitable?
Yes. Growth usually means buying more stock and paying more staff before the extra revenue arrives. Profitable, fast-growing businesses often feel the tightest squeeze.