Working capital
business loans
Cash flow gaps rarely arrive politely.
One week everything is steady.
Next week wages are due, suppliers want paying, and a few invoices are still sitting there unpaid.
Working capital finance is built for that exact moment.
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Last updated: January 2026
Written by CASEY, Australian business finance specialists
Quick answer
A working capital business loan is finance that helps you cover day-to-day costs when cash is tight, usually because money is coming in later than bills are due.
Most people use working capital for:
payroll and wages
supplier bills and stock
BAS and tax timing
overdue invoices
seasonal slow months
What it is not meant for:
long-term investments that take years to pay back
Most lenders will want to see recent business bank statements, because that’s the clearest picture of how the business is tracking right now.
Reality check
Working capital can be a smart buffer.
But only if it takes pressure off.
If the repayments are too aggressive, you can end up swapping one stress for another.
This page helps you choose something that actually fits your business, not just something that gets approved.
What working capital means (simple definition)
Working capital is the money your business needs to keep running day to day.
It covers the boring but important stuff:
wages
suppliers
stock
rent
fuel
BAS and tax
operating bills
If money goes out today, but money comes in later, that gap is working capital.
What a working capital business loan is
A working capital business loan is any business finance option used mainly to cover short-term operating costs.
It’s used to smooth timing.
Not because someone wants “more debt”.
Because they want the business to stay steady.
Common reasons businesses need working capital
In plain terms, it’s usually one of these:
customers are paying slower than before
supplier terms tightened
you need stock before the busy period starts
BAS or ATO timing landed at the wrong time
you’re covering costs while waiting for the next job or progress payment
a few invoices are overdue and cash is stuck
an unexpected bill hit and you need breathing room
If this is you, you’re not doing anything “wrong”.
It’s just cash flow timing.
3 real-life scenarios (what this looks like in the real world)
Scenario 1: payroll is due, but invoices are late
You’ve done the work. You’ve invoiced.
But three customers are running 45 to 60 days, and payroll is weekly or fortnightly.
So you’re not short on work.
You’re short on timing.
This is where working capital can help, as long as the repayments don’t create a second payroll problem next week.
Scenario 2: suppliers want payment before stock turns
You need stock to make sales, but the supplier wants payment upfront, or faster than they used to.
Your cash is tied up in inventory for a few weeks, so the bank balance looks worse than the business actually is.
Working capital can make sense here when it matches the stock cycle.
Scenario 3: a quiet month hits, then BAS lands
Some months are strong. Some are flat.
That’s normal for a lot of businesses.
But BAS, rent and suppliers don’t “care” that it’s a quiet month.
A working capital buffer can help here when repayments aren’t heaviest during the quiet weeks.
Signs you might be in a working capital squeeze
If a few of these feel familiar, you’re not alone:
you’re profitable on paper, but the bank balance doesn’t show it
you’re moving money between accounts to keep up
you’re paying suppliers later than you used to
you’re watching payroll dates with a knot in your stomach
you’re delaying stock orders because cash is tight
you’re relying on one or two big customers who pay late
you have a busy season, then a flat season, every year
Working capital finance can help in these situations, but only if it’s structured to suit your cash flow pattern.
The main types of working capital finance in Australia
There isn’t one “best” option. There’s the right fit for the problem.
Short-term unsecured business loan
Usually a lump sum used for a clear short-term need.
Common uses:
wages and operating bills
supplier payments
stock purchases
urgent expenses
Best when:
turnover is stable enough to support repayments
you need a lump sum, not an ongoing buffer
Business line of credit
A reusable limit you can draw from when you need it, then repay and reuse.
Best when:
cash flow swings happen regularly
you want a buffer in the background
you prefer flexibility instead of re-applying each time
Invoice-based working capital
Working capital linked to invoices you’ve already issued.
Best when:
the main problem is slow-paying invoices
you invoice other businesses and have a consistent ledger
Bank-style options (overdraft style facilities)
These can be strong options when you qualify, but approvals can be more conservative.
Best when:
the business is already in a stronger position
bank conduct is clean and consistent
Which option usually fits (simple guide)
If you want a quick gut-check, start here:
If you have a clear one-off need (stock, payroll catch-up, supplier payment), many businesses look at a short-term loan.
If you want an ongoing buffer for ups and downs, a line of credit is often a better fit because it’s reusable.
If the real problem is overdue invoices, invoice-linked working capital can be a better match than a standard loan.
If revenue is declining with no clear plan to stabilise, finance may still be possible, but the priority becomes reducing risk and avoiding repayment structures that tighten the squeeze.
If you’re unsure, an eligibility check is the fastest way to confirm what’s realistic without guessing.
100% free · No application without consent
Working capital for payroll
Payroll is a common trigger because wages have fixed dates.
If payroll is the reason you need working capital, structure matters more than the amount.
The wrong repayment schedule can turn into a cycle where you’re funding payroll, then funding repayments, then funding payroll again.
The goal is simple:
keep staff paid without creating a second problem next week.
Working capital for supplier bills and stock
Supplier and stock pressure usually looks like this:
you have to buy stock before sales land
suppliers tighten terms
a big order comes in, but you need cash to fulfil it
A safer approach is to match the facility to the stock cycle, so the funding supports the turnover, not fights it.
Working capital for overdue invoices
Overdue invoices can cripple a good business.
But the right solution depends on the cause.
Ask this first:
Are invoices late, or is the business not making enough profit?
If it’s mainly slow-paying customers, invoice-linked working capital can make sense.
If it’s mainly low margins or falling sales, debt can buy time, but it won’t fix the root cause.
Working capital for seasonal dips
Seasonal dips are normal in many industries.
The problem is bills keep coming even when sales slow down.
A good working capital plan for seasonal dips usually includes:
a buffer before the dip starts
repayments that don’t peak during your quiet weeks
a clear plan for how the dip ends
Working capital for unexpected expenses
Unexpected costs can hit fast:
breakdowns and urgent repairs
compliance costs
supplier issues
essential replacement equipment
When this happens, choose the option that keeps repayments manageable.
Fast funding isn’t helpful if it drains the account straight away.
Working capital for contractors
Contractors often have strong work, but messy timing.
Common patterns:
materials are due before the invoice is paid
contract delays push payment out
income comes in lumps, not evenly
Working capital can help bridge the gap, but it has to suit the real cash flow pattern, not an ideal one.
Working capital for sole traders
Sole traders can qualify, but assessment can be tighter because the business and the person are closely linked.
What usually helps:
consistent deposits over time
clean business banking (as clean as practical)
a clear explanation of how the business makes money
stable recent trading
Working capital when income is irregular
Irregular income is normal in trades, construction, hospitality, and many service businesses.
The key is not to force a “perfect month” story.
It’s to show the real pattern across multiple months, and structure repayments around it.
Working capital when revenue is declining
This is where you need to be careful.
Working capital finance may help if:
the decline is temporary and explainable
you have a realistic plan to stabilise, starting now
It often doesn’t help if:
sales are falling steadily with no clear recovery path
you’re already behind on essentials and getting deeper each week
A simple self-check:
Is money late, or is there less money overall?
If you’re unsure, an eligibility check can clarify what options are realistic without creating extra damage.
Daily vs weekly vs fortnightly repayments
Repayment structure matters more than most people expect.
A facility can look fine on paper, then feel brutal in real life.
Daily repayments:
can work if daily takings are consistent
can hurt if income comes in lumps (weekends, progress payments, end-of-week)
Weekly repayments:
often easier than daily for many SMEs
Fortnightly repayments:
can suit businesses that run on fortnightly payroll cycles, but still need room in cash flow
Simple rule:
Repayments should fit your cash flow rhythm, not fight it.
Eligibility criteria (what lenders usually look for)
Most lenders are trying to answer one question:
Can this business repay without falling behind on normal expenses?
Working capital eligibility usually comes down to:
recent bank statement conduct
consistent turnover (or a clear reason for temporary dips)
existing debts and repayment load
how the funds will be used
whether the request matches the problem
recent enquiries and “stacking” risk
This is why it’s often safer to do an eligibility check first, instead of spraying applications and hoping.
What lenders really mean when they say…
This section is worth reading because it removes a lot of guesswork.
“Stable turnover”
They usually mean deposits are consistent enough that repayments won’t cause the account to constantly run dry.
A business can still have ups and downs.
They just want the pattern to make sense.
“Negative days”
They usually mean how often the account drops below zero, and whether it stays there.
A couple of negative days can happen.
A pattern of being stuck in negative is a different story.
“Dishonours”
They usually read dishonours as a sign the business is running too tight.
Even if the business is good, repeated dishonours make it look unmanaged.
“Serviceability”
They usually mean the business can repay while still paying normal bills like wages, suppliers, rent, BAS.
It’s not just “can you repay”.
It’s “can you repay without breaking the business”.
“Enquiry stacking”
They usually mean multiple recent checks or applications can signal desperation or financial stress, which can reduce approval options.
What lenders look for in bank statements (plain English)
Bank statements are usually the clearest story of what’s happening right now.
Lenders commonly look for:
deposits that match how the business earns money
spending patterns that are stable and explainable
how often the account goes negative
dishonours and late payments
existing repayments coming out cleanly
signs of constant shortfall (for example, repeated small transfers just to survive)
A helpful way to think about it:
They’re looking for stability, not perfection.
A clear pattern with a sensible explanation beats a messy story every time.
Documents you will usually need
In most cases, expect:
at least 6 months of business bank statements
ABN and GST details
director ID
details of existing loans and liabilities
Sometimes, depending on the situation:
ATO portal or BAS confirmation
invoices and debtor information (if invoice-based working capital)
extra supporting documents for certain lenders or larger requests
Common reasons working capital loans get declined
the statements show the business is already behind on essentials
repayments are already too heavy for the turnover
revenue is trending down with no clear explanation
too many recent enquiries or short-term facilities stacked together
the amount requested doesn’t match cash flow
the purpose is unclear or keeps changing
spending patterns raise concerns and can’t be explained
This is why structure matters.
The right option should reduce pressure, not add to it.
Before you apply (5 calm checks that protect your options)
These small steps can make a bigger difference than people expect.
1) Be clear on the real reason you need working capital
Payroll, suppliers, stock, BAS, overdue invoices, seasonal dip. Pick the main driver.
2) List every existing repayment
Even small ones. Lenders will see them anyway, so it’s better to be accurate upfront.
3) Avoid stacking enquiries
If you apply everywhere, you can accidentally reduce your choices.
A calm eligibility-first approach usually protects your options.
4) Keep business banking clear where you can
It doesn’t need to be perfect.
It needs to be easy to understand.
5) Make sure repayments fit your cash flow pattern
A repayment structure that looks fine “monthly” can still hurt daily.
If you’re unsure, ask before you commit.
100% free · No application without consent
FAQs
Can I get a working capital business loan with bad credit?
Sometimes, yes. It depends on what caused the credit issues, how recent they are, and what the business bank statements show now.
Are working capital loans only for struggling businesses?
No. Many healthy businesses use working capital finance to smooth timing gaps, handle seasonal swings, and protect the business during busy growth periods.
Is a business line of credit the same thing as a working capital loan?
A line of credit can be used as a working capital solution because it’s flexible and reusable.
Can I use working capital finance to pay suppliers and wages?
Yes. That’s one of the most common uses. The key is making sure repayments don’t create a new cash squeeze.
Is invoice finance the same as a working capital loan?
Invoice finance can be a working capital option, but it’s tied to invoices and debtor quality, not just general business cash flow.
Related resources
Want to learn more, check out our guides below:
Low doc business loan
Best when you need a lump sum for a clear purpose, without financials, and statements show affordabilityBusiness line of credit
Best when the issue is timing gaps and you want flexibility rather than a one-off lump sumBad credit business loans
Best when credit history is the main blocker, but statements show the business is now stable
The CASEY approach
CASEY is built for business owners who want straight answers and a safe structure, without pressure.
A big part of the job is helping you avoid options that look fine on paper but squeeze the account in real life.
If you’re unsure what fits, that’s normal. A quick eligibility check can usually clarify what’s realistic without guessing.
Important note (general information only)
This page is general information and doesn’t take into account your objectives, financial situation, or needs. Outcomes depend on lender assessment and eligibility criteria. Consent matters — we aim to avoid wasted applications and only proceed when you want to.
About CASEY
CASEY is an Australian business finance brokerage helping business owners understand what options may be available.
Business name: Casey Finance Australia Pty Ltd (trading as Casey Asset Finance)
ABN: 21 675 061 113