Working Capital Finance

Get access to working capital loans to manage day-to-day expenses and grow your business through Savvy today.

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Your business needs the finances to keep it running like a well-oiled machine. This can be a tough balancing act when there is a range of operational costs that can put a strain on your business’s budget.

Savvy offers working capital loans that have been sourced from leading lenders to cover expenses such as employee wages, day-to-day costs, inventory purchases and more to keep your business running. You can compare solutions tailored to your business.

Personalised finance options from the experts

Savvy understands that your business is not cut from the same cloth as the next when it comes to finding a finance solution that works for you. Our years of commercial finance experience allows us to find you the best available loan option from of panel of over 40 of Australia’s leading lenders. Your consultant will take you through a guided process to find a solution that will keep moving forward. Get started with a free quote today!

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More on working capital business loans

How does a working capital business loan work?

A working capital business loan is designed to provide a boost to your business’ working capital if you find yourself low on short-term cash flow. It’s essentially an unsecured business loan, meaning you won’t be required to provide asset security for your loan, such as your house or valuable business equipment, if you don’t wish to. This opens the door for smaller businesses who don’t have the assets required for a standard secured loan to access finance for working capital when they need it.

You’re given a lump sum from the outset, which you’re then tasked with repaying in instalments over a set period with interest. The rate you’re given on your loan is typically based on risk, meaning there are a variety of factors which will affect it, such as your business’ trading history and credit score. It’s important to note, though, that you can claim the interest portion of your business loan repayments as a tax deduction, which can save your business a considerable amount throughout your repayments.

These types of loans are flexible when it comes to how you’re able to repay them. Lenders offer repayment terms of as little as three months up to a maximum of five years, giving you ample opportunity to select a loan with a repayment period which suits your business’ needs. It’s important to prioritise loan offers from lenders who can accommodate your business’ preferences when it comes to loan terms, as you don’t want to be forced to pay more than you’re comfortable with a shorter term.

How much can I borrow with a business loan for working capital?

Like your loan’s interest rate, there are several variables which will affect your business’ borrowing power when it comes to working capital loans for small business. While unsecured loans range from $5,000 to $500,000, how much you’ll be approved for can vary significantly. These include:

Your business’ turnover

Of course, your business will need to be generating enough revenue to support your loan’s repayments. Your lender will require you have a minimum turnover of $5,000 (and sometimes more) to qualify for a loan. The more comfortable you are at the time you apply, the more you’re eligible to borrow.

The value of your business’ assets

It’s not just the cash available in your business, though, as the values of the assets owned by your business are also counted when determining your working capital. If you have equipment and machinery such as an industrial freezer and ovens, computer systems or a company vehicle, they’ll all be considered when determining your borrowing power. However, they’re not required to be put up as security, as they simply help build your overall profile.

Your business’ liabilities

The debts your business has on its plate will factor heavily into its determination of your borrowing power. Not too great a proportion of your cashflow should be taken up by debts, so if you’re already struggling to keep up with repayments on your assets and other bills, you’ll likely only be approved for a small amount, if anything at all.

Your business and personal credit scores

Your business’ credit score indicates to your lender of its reliability when it comes to servicing debt, namely other loans and common bills such as rent and utilities. The higher your score, the more you’ll be able to borrow, as lenders will feel more comfortable lending larger amounts and being confident you can repay them.

Your business’ trading history

Finally, a longer history of trading can show your lender that your business’ revenue generation is more consistent and reliable than that of a new business. As with your credit score, a lender assessing the application of a business which has been trading for several years and maintained a consistent revenue stream is more likely to approve the amount they need.

What can I use a working capital loan for?

Because working capital loans for small businesses are, more often than not, unsecured business loans, you can essentially use them however you see fit (provided they’re used for business purposes). There are many reasons why you might wish to boost your business’ working capital, such as:

Providing short-term flexibility

Simply put, you might want to cover your bases and have money available should you end up needing it. It can be added to your business’ cash reserve and distributed across your business in whatever way you like.

Covering extra purchases during busy periods

Busy periods may require you to purchase greater inventory, even if you don’t quite have the funds to cover it. Adding to your working capital with a loan can help you pay for these at your own speed.

Taking on new employees or paying current ones

Paying employees is a significant financial commitment for any business, so if your business needs more hands on deck, you can cover the cost of employing new people with a loan and make more manageable repayments to your lender.

More about working capital finance explained

Can my business afford a cash flow loan?

Every financial decision you make matters when you are trying to keep your business afloat. This also means carefully considering your options. Whether you plan to take out a cash flow loan, a line of credit, or credit card to manage your cash flow you will have to consider the costs that come with it. Check to see if you will be able to afford the repayments. You may have to assess your business altogether to see what keeps creating the shortfall to avoid getting into a debt spiral.

Cash flow vs asset-based lending

Cash flow and asset lending are both loans that can be handy when it comes to covering cashflow shortfalls your business may face. However, the key difference between the two is that asset lending requires that you use an asset as collateral, while cash flow lending is an unsecured business loan that does not require any collateral. Cash flow lending comes with convenience and flexibility that can help cover business emergencies for example when your waiting for an invoice to be paid while asset lending is more of a long-term facility to finance assets that are required for the business which could be anything from a piece of machinery, truck, car, software.

How to effectively use a business loan?

There are various business loans and credit cards that you can use to help boost your cash flow and keep your business afloat. However, to make the most of your finance option it pays to know what features to compare and speaking to a financial advisor to see if it will be the best option for your business. Remember to compare your options and compare the ongoing fees that come with it. Avoid taking out taking more than what your business needs as this could affect your repayments overtime.

Managing your loan effectively

No matter what finance option you choose to keep the wheels of your business from falling off, it pays to think about how it will affect your finances long term. Not only will it help you avoid financial woes such as falling into a debt spiral, but it can also ensure that you choose something that will be beneficial for your business. Check components such as the interest rate, fees, and charges that come with it. The devil is in the detail. Therefore, remember to never rush the process.

Common questions about working capital loans

How much can I borrow?

The amount you'll be able to borrow will vary depending on your business needs that will be assessed during the application process with our team of qualified consultants. The minimum usually begins at $5,000, but you can speak to a consultant to find the loan amount you will be able to get access to.

Can I use this loan for investments?

No. Unfortunately, you can’t use a working capital loan for investments, or long-term asset purchases. It can be used to cover short-term business operations such as paying wages, carrying out day-to-day operations, short-term inventory purchases and more.

Can I get a working capital loan if I am self-employed?

You can compare loans for people who are self-employed through Savvy. Ask our experienced team of consultants about finding a tailor-made solution for you.

Will you require security for the loan?

No. Our unsecured business loans are designed to offer you and your business flexibility when it comes to choosing a finance option that will not strain your budget, but will it move forward.

When will I know if I have been approved?

Our team of consultants will contact you as soon as you get approved. It usually takes 24 hours for you to know if you have been approved or not.

Will I be able to purchase a car for both personal and business use for the loan?

Working capital loans are designed to take care of a multiple array of expenses that your business may face. However, you may not be approved for the loan if you are planning on using it for your own personal use. Which means that if you plan to purchase a car with the loan it needs to be purely for business.

What is the typical loan term?

We offer flexible loan terms that range from 1 year to 7 years to help you spread out the costs and manage your repayments.

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