A survey of CFOs in Australia showed that 73 percent of them faced challenges managing working capital in 2023. That explains why many small businesses are searching for where to get working capital loans in Australia.
If you’re one of those businesses, this article provides a useful guide you can use to access working capital in Australia. Let’s start by looking at the definition and benefits:
What are Working Capital Loans?
Working capital loans are business loans that cover a company’s day-to-day operational expenses and short-term financial needs. Unlike other loan types you can use for long-term investments or asset purchases, working capital loans are mainly to support the ongoing operations of your business.
The goal of working capital loans is to help a business maintain liquidity, manage day-to-day expenses, and seize growth opportunities.
The Benefits of Working Capital Loans to Your Small Business
Working capital loans offer many benefits to small businesses. Here are some of them:
Maintaining Cash Flow
One of the key benefits of working capital loans for your business is that they help you maintain a healthy cash flow.
You can use them to cover operating expenses, pay suppliers, meet payroll, and manage other short-term financial obligations. This ensures that the business keeps operating smoothly even during periods of low revenue or unplanned expenses.
Managing Seasonal Fluctuations
If your business experiences sales or revenue spikes, especially during certain seasons, working capital loans will be useful.
Working capital loans help you meet demands by ensuring you don’t run out of products during this period. They also enable you to stay afloat during slow seasons. With the necessary funds, you can cover expenses and maintain operations until business picks up again.
Seizing Growth Opportunities
Working capital loans ensure you have the resources to seize growth opportunities. You can use the funds to expand inventory, launch a new marketing campaign, or hire more staff.
Being able to invest in growth initiatives and capitalize on market opportunities is what you need to take your business to the global stage. Having access to working capital when you need it plays a vital role in that.
Preserving Equity
You can preserve your equity while still having access to enough funds to run your business.
Unlike equity financing, working capital loans don’t need you to sell shares of your business to investors. It allows you to retain full ownership and control of your company.
Where to Get Working Capital Loans for Your Small Business in Australia
Here are some places where you can access working capital loans in Australia:
Traditional Banks
Major Australian banks, such as Westpac, ANZ, NAB, and Commonwealth Bank, offer working capital loans to small businesses. They offer the loans as overdrafts, business lines of credit, or term loans.
Most loans from traditional banks are secured, as you’d have to offer reasonable collateral to access them. However, some working capital loans are unsecured. You only need to provide detailed financial information about your company and show that you can repay the loan.
Accessing working capital loans from traditional banks can be a hectic process. It can take days before the funds drop into your account. So, you must make sure to apply at least one week before the time you need the loans.
Online Lenders
If you’re in urgent need of working capital loans, some online lenders in Australia can provide that in minutes.
Many online lenders in Australia offer working capital loans to small businesses. Some of the most popular are Lendio, Capify, OnDeck, Prospa, etc.
These online lenders have simpler loan application processes than traditional banks. They also approve loan applications quicker than most financial institutions. Another good thing is that they don’t request collateral or any form of security when offering you loans.
However, most online lenders have higher interest rates than traditional banks. You must consider this when sourcing for working capital.
Government Programs
The Australian government plays a vital role in helping small businesses solve their cash flow problems. It offers various programs and initiatives to support small businesses with working capital needs.
A good example of those programs is the Australian Small Business Finance Advisory Service (ASBFAS). It’s structured to provide small businesses in Australia with valuable advice on how they can access working capital loans.
Furthermore, the Australian government, through the SME Guarantee Scheme, provides an 80% loan guarantee to businesses. For businesses that want to expand operations and send their products to other countries, the Australian government provides support through the Export Finance Australia scheme.
Small Business Development Corporations
Some Australian states and territories provide support to small businesses through business development agencies. For example, Western Australia offers grants and loans to small businesses through Small Business Development Corporations (SBDCs).
The SBDCs also provide business advice and assistance to small businesses, providing all the information you need to grow.
Industry-Specific Funds and Grants
Depending on your industry, you can access working capital from industry associations, government agencies, or private organizations with an interest in supporting businesses in that industry.
While industry-specific funds are rare, many small business owners prefer them to general loans. The application process is less competitive, and those offering it are more knowledgeable in the industry and can offer valuable industry-specific advice.
Conclusion
Easy access to working capital loans is essential for small businesses, as it plays a vital role in their growth. The good thing is that there are many places in Australia where you can get working capital loans for your business.
Now that you know where you can access working capital loans in Australia, go on and give your business the boost it needs to grow.
