What working capital finance is for
Most businesses that run short on cash aren't unprofitable. They're profitable on paper and short in the account, because money goes out before it comes in: wages every week, suppliers at thirty days, and customers paying at forty-five or sixty.
Working capital finance funds that gap. What separates it from a general business loan is less the product and more the sizing: the facility should be built around your cash conversion cycle, not a round number that felt about right.
Typical terms across our panel
| Facility size | $25,000 to $2 million, sized to your cash conversion cycle |
|---|---|
| Term | Three to twenty-four months for a term facility; revolving options are ongoing |
| Rate range | Roughly 9.5% to 22% p.a. for term facilities, depending on tier |
| Structure | Term loan, revolving line, overdraft or debtor finance, whichever fits the cycle |
| Repayments | Weekly or monthly; some facilities are interest-only against the drawn balance |
| Security | Usually a general security agreement and a director's guarantee |
| Minimum trading | Six to twelve months, depending on lender |
Sizing it properly
Getting this wrong in either direction is expensive. Too small and you're back in three months paying a second set of establishment fees. Too large and you're paying for money that sits idle.
The starting point is straightforward: how long between paying for the work and being paid for it, and how much goes out in that window. A civil contractor mobilising a job pays for labour, plant hire and materials for six to eight weeks before the first progress claim clears. That window, not the contract value, is what the facility should cover.
When working capital finance is the wrong answer
If the gap is caused by a structural problem such as margins too thin, one customer consistently paying late, or a loss-making line of work, borrowing postpones it and adds a repayment on top. We'll say so. Sometimes the fix is a debtor finance facility that flexes with your ledger, sometimes it's chasing terms with one customer, and sometimes it's not a finance problem at all.
What lenders are looking at
- The pattern in your statements: whether the shortfall is a timing gap that resolves each cycle, or a trend heading one direction.
- Debtor quality. Who owes you, how much, and how reliably they pay.
- Seasonality. A quiet January is normal in some sectors and a red flag in others. Explaining it upfront saves a decline.
- Concentration risk. One customer at seventy per cent of revenue is a real consideration for a credit team.
- Your ATO position, and whether any arrangement is being met.
What you'll need to send
- Twelve months of business bank statementsEvery trading account. This is the main thing a lender reads.
- Your ABN and GST registrationWe pull most of this from the ABR ourselves.
- Director identificationDriver's licence or passport.
- An ATO integrated client account statementOnly where there's a balance owing.
- Recent financials and BASUsually only above $250,000, or where the lender asks.