Working capital loans for New Zealand businesses

Every business has money in motion. You pay for stock, then sell it. You pay staff, then invoice the client. You pay rent and power before customers walk through the door. The money tied up in that cycle is your working capital, and when the cycle stretches — through growth, slow payers or a big order — the business needs more of it than the bank account holds.

How do I know if I need working capital funding?

Signs that working capital, rather than profitability, is the issue:

• The business is profitable on paper but the account is regularly close to zero.
• You’re turning down work because you can’t fund the materials or staff up front.
• Supplier accounts are stretching past terms.
• Tax payments are tight even though sales are growing.
• You rely on a personal credit card to bridge business costs.

How much working capital does a business need?

A simple way to estimate it is to look at your cash conversion cycle — how many days money is tied up:

Component	Question	Effect
Stock days	How long does stock sit before it sells?	Longer = more cash tied up
Debtor days	How long do customers take to pay?	Longer = more cash tied up
Creditor days	How long do you take to pay suppliers?	Longer = less cash tied up

Add stock days and debtor days, subtract creditor days, and you have the number of days your money is locked away. Multiply that by your average daily costs and you have a rough working capital need. If that figure is larger than the cash buffer you keep, a facility can make up the difference.

Lump sum or revolving facility?

Lump-sum working capital loan. Paid out once, repaid over a set term. Good for a defined need — restocking after a big season, funding a new location’s first months, or clearing a backlog of supplier bills.

Revolving line of credit. A limit you draw from and repay. Better for ongoing, fluctuating needs because you only pay for what you use.

Property-secured facility. If the need is large or long-term, a first or second mortgage over property — from $20,000 to $5,000,000 — can provide more room and a longer term.

What do lenders look at?

For unsecured working capital, lenders focus on the account:

• Average monthly deposits over the past three to six months
• Consistency of income from month to month
• Existing loan repayments and other regular commitments
• Number of dishonours or overdrawn days
• Time in business and industry

For secured working capital, the property and its equity become central, with the business’s trading still relevant.

When you’re ready, you can check what you might qualify for in about 60 seconds — no credit check is run.

How to use working capital funding well

• Fund the cycle, not the losses. If the business loses money each month, more working capital only delays the problem.
• Track your cycle. Shortening debtor days or stock days frees up cash without borrowing.
• Keep tax money separate. GST and PAYE are not working capital; they belong to Inland Revenue.
• Review the facility annually. As you grow, the right limit changes.

An illustrative example

An illustrative Wellington commercial cleaning company wins two new office contracts. Each requires extra staff from day one, but clients pay monthly in arrears on 20th-of-the-month terms. Payroll is weekly. For roughly seven weeks, the business funds the new contracts entirely from its own cash. A revolving limit sized to around six weeks of the extra wage bill lets the owner take on both contracts without straining the account, and the limit stays available for the next win.

Why growing businesses feel working capital pressure most

It’s counter-intuitive, but a business growing quickly can run out of cash faster than one standing still. Each new customer adds stock, wages and materials before their payments arrive. If your growth rate is high, your working capital need grows in step. Our page on the growth cash squeeze explores this in more detail, and the Cash Flow Gap & Fast Loan Matcher can help you put a number on it.

A quick checklist before you enquire about working capital loans

Write down the amount you need and exactly what it will pay for. Note the date the money is needed and the date you expect to repay it, and name where that repayment will come from. Download your last three to six months of business bank statements, check that your GST and PAYE filings are up to date, and have your NZBN and photo ID handy. If you’re offering property, jot down its address, a realistic value and what’s still owing on it. Ten minutes spent on this list before the first call can save days later, because the person helping you can go straight to the options that genuinely fit rather than chasing missing details.

Keep your business moving

Working capital is the fuel that keeps a business running smoothly. If too much of yours is tied up in stock, debtors or work in progress, let’s look at how to free it up. There’s no credit check to enquire, your details won’t be sprayed across multiple lenders, and a real person will go through your situation with you.

Please be accurate on the form — your amount, purpose, trading time and any property — so we can line up the right facility from the outset. Ask about working capital.