Most New Zealand businesses that run short of cash aren’t unprofitable. They’re simply paying out before they get paid. A builder covers materials and a crew for five weeks before the progress claim clears. A wholesaler pays for a container of stock in September that sells through November. A café pays wages every week but gets hammered by a wet January. The profit is real — it’s just sitting in the wrong place at the wrong time.
Working capital is the buffer that covers that timing gap. When the buffer runs thin, a working capital loan tops it up.
What counts as “working capital”?
In accounting terms, working capital is your current assets (cash, money owed to you, stock) minus your current liabilities (supplier bills, GST, PAYE, short-term debt). In plain English, it’s how much room you have to keep operating while you wait for customers to pay.
A business can have strong sales and still have negative working capital if:
- customers take 45–60 days to pay while suppliers want payment in 20;
- a large order needs materials bought up-front;
- a GST or provisional tax instalment lands in a slow month;
- the business is growing quickly, so each month’s outgoings are bigger than last month’s receipts.
That last one catches plenty of owners out. Growth eats cash.
When does a working capital loan make sense?
Borrowing for working capital is sensible when the money unlocks income you’d otherwise lose, or prevents a cost you’d otherwise pay. Common examples we see:
- Taking on a bigger contract that needs labour and materials funded before the first payment.
- Covering a seasonal dip — tourism operators in winter, landscapers in July, retailers after Christmas.
- Clearing a pile-up of bills so supplier relationships and trade discounts stay intact.
- Paying GST or provisional tax on time rather than taking on IRD penalties and interest.
- Smoothing a slow payer — a large customer on 60-day terms who’s reliable but slow.
It makes less sense if the business is losing money every month with no change in sight. Borrowing then only delays a decision. Be honest with yourself about which situation you’re in.
Secured or unsecured: the two routes
Loanster works with lending partners on both routes.
Property-secured working capital
If you (or a supporting party, such as a family member or a related trust) own New Zealand property — a home, rental, commercial building or land — that property can secure a business loan from $20,000 up to $1m, as a first or second mortgage, even if there’s already a mortgage on it.
Why owners choose it:
- no financials or tax returns needed for the initial assessment;
- bad credit, defaults and arrears considered case by case;
- IRD debt can be refinanced or paid out as part of the loan;
- in some cases funding can happen within 24 hours of approval.
Want a rough idea of the equity available? Try the property equity estimator.
Unsecured working capital
No property? Unsecured business loans are assessed mainly on turnover and bank statements. Lenders usually look for six months or more of trading, and weaker credit is considered. Decisions are sometimes made the same day. The amount available depends on what your statements show — deposits, consistency, and how the account is managed. See unsecured business loans for the detail.
What about a line of credit?
If your gap comes back every month or every season, a business line of credit can be a better fit than a lump sum: draw it when the gap opens, repay it when customers pay.
How much working capital do you actually need?
Guessing leads to borrowing too little (and coming back in six weeks) or too much (and paying for money you didn’t use). A quick method:
- Add up your average monthly outgoings — wages, rent, suppliers, vehicles, software.
- Work out your debtor days: how long, on average, customers take to pay.
- Multiply monthly outgoings by (debtor days ÷ 30). That’s roughly the cash you’re carrying before sales convert to money.
- Add any known one-off hits in the period: a GST return, provisional tax, an insurance renewal.
- Subtract the cash you already hold.
Our cash-flow gap calculator runs this for you and shows each component, so you can see whether the gap is a timing problem or a trading problem.
What lenders look at
Every loan is priced on your individual circumstances, and what matters depends on the route:
| What they check | Property-secured | Unsecured |
|---|---|---|
| Main basis | Value of the property and existing lending on it | Turnover and bank statements |
| Financials at first assessment | Not needed | Bank statements rather than full accounts |
| Credit history | Case by case, including defaults and arrears | Weaker credit considered |
| Trading time | Flexible | Usually 6+ months |
| Speed | Within 24 hours of approval in some cases | Decisions sometimes same day |
How to apply
Enquiring takes about 60 seconds and doesn’t affect your credit score. Tell us what the money is for, roughly how much, and whether there’s property involved. A Loanster lending specialist calls back, talks through the realistic options, and only then do you decide whether to proceed. Sole traders, companies, partnerships and trusts can all apply — it’s business-purpose lending only.