Working capital loans: cash for the gap between buying and being paid

Every business that buys before it sells has a gap. A builder pays for timber weeks before the progress claim clears. A homewares shop pays for Christmas stock in September. A labour-hire firm pays wages every week while clients pay monthly. A working capital loan fills that gap so the business can keep buying, keep staff paid and say yes to work.

What is a working capital loan?

It’s short-term finance for the running costs of the business rather than a long-lived asset. Most are unsecured, sized on how much flows through your account, and repaid over months. Larger amounts can be secured against property when the gap is big or the term needs to be longer.

The money can go to:

• A big stock order ahead of a peak season.
• Materials and labour for a job before the first payment arrives.
• Wages and super through a slow quarter.
• A supplier deposit that unlocks a better price.
• Clearing an expensive short-term debt that’s choking cash flow.

Is it a timing gap or something deeper?

This is the most important question, and it’s worth answering honestly before borrowing. A working capital loan fixes timing. It doesn’t fix a business that loses money on every sale.

Sign	Likely a timing gap	Likely a deeper problem
Why cash is short	A big order or slow-paying client	Costs regularly exceed income
When it ends	You can name the date or event	You can’t see an end point
Margins	Healthy on each sale	Thin or negative
Past borrowing	Repaid on time	Rolled from one loan to the next

The Reserve Bank’s October 2026 Financial Stability Review notes that smaller businesses continue to face cash-flow pressure, with insolvencies elevated in hospitality, construction and transport. If you’re in one of those industries, be especially clear about where the repayment comes from. When the gap is structural, a longer-term property-backed loan, a pricing review or a conversation with your accountant comes first.

How do lenders size a working capital loan?

For unsecured amounts, lenders lean heavily on bank statements:

1. Average monthly deposits over six to twelve months.
2. Consistency. Seasonal swings are fine if they repeat each year.
3. Existing commitments. Other loans, leases and payment plans.
4. Account conduct. Dishonours and long overdrawn stretches count against you.
5. Purpose. A specific need, like a stock order with a supplier invoice, helps.

Illustrative example. A Melbourne homewares retailer turns over about $1.2 million a year, with nearly a third of it in November and December. Each September it needs about $90,000 of stock. A working capital loan drawn in September and repaid by February matches the cash cycle exactly. A loan over three years for the same stock would leave them paying for Christmas 2026 stock well into 2029.

Working capital loan or line of credit?

Both fund the same kind of need. The difference is rhythm.

• One gap with an end date (a season, a contract): a working capital loan.
• Gaps that repeat all year: a business line of credit.
• A big stock order specifically: see stock and inventory finance.
• A large contract with progress payments: see funding a big contract.

What should you have ready?

• Business bank statements for six to twelve months.
• A rough cash-flow forecast showing when the money comes back.
• Supplier quotes or the contract you’re funding.
• Details of existing debts, including any ATO payment plan.

How can you shrink the gap before borrowing?

Borrowing to cover a timing gap works, but shortening the gap is even better. Practical steps many businesses take:

• Invoice faster, ideally on completion or at each milestone, not at month end.
• Offer easy payment options so customers can pay the day they receive an invoice.
• Chase overdue accounts on a set schedule.
• Negotiate supplier terms that match your customer terms.
• Ask for deposits on larger jobs or custom orders.
• Review slow-moving stock and clear it to free cash.

Even a week or two off the gap can reduce how much you need to borrow and for how long. When you do borrow, a smaller, shorter loan costs less and is easier to repay.

Ready to close the gap?

If the work is there and the cash is just arriving later than the bills, working capital funding can keep things moving. Asking us won’t leave a mark on your credit file; that only comes up if you decide to go ahead. We don’t push your details to a pile of lenders. A real person looks at your cash cycle, tells you plainly whether a loan fixes it, and calls you with options.

Fill in the form accurately, particularly turnover and what the money is for, and we can match you properly first time. See what working capital you could access.