What does working capital finance actually pay for?
Working capital is the money that sits inside your trading cycle: the wages paid on Wednesday for work invoiced last month, the supplier run on the 20th, the stock on the shelf and the GST return due whether or not customers have paid. For an established SME the business is usually profitable on paper. The pressure comes from timing.
Owners typically use working capital finance to:
- carry debtors when large customers pay on 45 or 60 day terms
- fund payroll and PAYE through a slow month without leaning on the tax account
- take a supplier’s early-payment discount or a bulk-buy price
- cover a GST, provisional tax or PAYE obligation, or clear an IRD arrears balance
- keep the business running normally while a key customer disputes an invoice
It is not a fix for a business that is losing money month after month. It is a tool for a business that makes money but keeps it tied up in receivables and stock.
Why do growing SMEs run short of cash?
Growth consumes cash. Every extra dollar of sales usually means more stock, more wages and more money owed to you before any of it comes back. A business turning over $3m that lifts sales by 20% may need tens of thousands of extra dollars in the cycle, even though profit is rising.
Recent small-business data shows why the gap is real. Xero Small Business Insights for the June 2026 quarter put the average time for New Zealand small businesses to be paid at 24.1 days, with invoices paid an average of 4.7 days late. That average hides the harder cases: trade and wholesale businesses selling to large customers routinely wait much longer.
Use the estimator further down this page to see roughly how much cash your own cycle holds.
Secured or unsecured: which suits working capital?
Both work, and the right answer depends on the size of the need and what security is available.
| Property-secured | Unsecured | |
|---|---|---|
| Amount | Up to $1m, driven by property equity | Based on turnover and bank statements |
| Documents for first look | No financials or tax returns needed | Recent business bank statements |
| Credit history | Bad credit, defaults and arrears considered case by case | Weaker credit considered |
| Timing | Funding possible within 24 hours of approval in some cases | Decisions sometimes same day |
| Best for | Larger or longer needs, IRD clean-ups | Short, recurring gaps |
A property-secured facility can sit as a first or second mortgage over a home, rental, commercial property or land that the business owner or a supporting party already owns, even when there is already a mortgage on it. An unsecured facility or line of credit suits businesses usually trading six months or more that want something quicker and lighter.
How is the amount worked out?
For unsecured facilities, lenders look at turnover and at the pattern in your bank statements: regular deposits, how the account handles the low points, and existing repayments. For property-secured facilities, the value of the property and the existing lending on it set the ceiling, and the lender then looks at the story behind the request.
In both cases it helps to be clear about three things:
- The gap. How much cash is tied up and for how long. The estimator below gives a quick starting point.
- The cause. Seasonal, growth-driven, a one-off tax bill or a slow-paying customer each suggest a different structure.
- The exit. How the facility gets repaid or reduced, for example when debtors are collected or the busy season arrives.
Every loan is priced on the business’s individual circumstances. We look for the sharpest option available for your situation rather than quoting a headline figure that may not apply.
What should you fix before borrowing?
Finance works best alongside some housekeeping. Before you apply it is worth checking:
- Debtor days. Are invoices going out promptly and being chased on a schedule? Our guide on debtor management for SMEs covers practical steps.
- Creditor terms. Are you paying suppliers faster than your terms require?
- Stock. Is slow-moving stock soaking up cash? A stock count by age can be revealing.
- A 13-week forecast. A simple rolling cash flow forecast shows lenders you understand your own cycle.
How does the process work?
You complete a short enquiry, which takes about 60 seconds. A lending specialist calls to understand the business, the purpose and the amount, then outlines property-secured and unsecured options that fit. If you proceed, the specialist gathers what the chosen lender needs and keeps you updated. The how it works page sets out each stage.
Estimate how much cash your trading cycle ties up
A quick, rough gauge using sales as the base. Enter your own figures; nothing is stored or sent anywhere.
This is a simplified sales-based estimate for planning conversations, not a credit assessment. Your accountant can refine it using cost of sales for stock and creditors.
Questions SME owners ask
How much working capital can an established SME borrow?
Facilities we arrange run from $20,000 to $1m. Where the loan is unsecured, the amount is driven by turnover and what your bank statements show. Where it is secured on New Zealand property, the available equity in that property does most of the work.
Do I need up-to-date financial statements?
For a property-secured facility, no financials or tax returns are needed for the initial assessment. For an unsecured facility, recent business bank statements are the main document, because they show real trading rather than last year's accounts.
Can working capital finance be used to pay GST or PAYE?
Yes. It is a business purpose, and IRD debt can also be refinanced or paid out with a property-secured loan. Many owners prefer that to letting penalties build on an overdue return.
Is a working capital loan the same as an overdraft?
Not quite. An overdraft is a bank facility tied to your transaction account. A working capital loan is a separate facility, and an unsecured line of credit works a little like an overdraft you draw on when needed. See our page on unsecured loans and lines of credit.
Will asking about working capital affect my credit score?
No. The enquiry takes about 60 seconds and does not affect your credit score. A lending specialist calls you to talk through options before anything formal happens.