Working capital product

A term facility for a known gap , repaid on a schedule.

A working capital loan borrows a fixed amount against the trading position and repays it on a fixed schedule. It suits a gap the business can size, and it is the wrong shape for a gap that opens and closes.

Last reviewed 8 September 2026

Indicative repayment

Weekly

Disclaimer

$870/week

$3,771 /month $7,885 total interest

Loan amount $60,000

$5,000 $500,000

Loan term 18 months

6 months 5 years

Indicative rate 16.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

The short version

Five lines before the detail.

It is a term loan by another name. The distinguishing feature is the use rather than the mechanism. Fixed amount, fixed schedule, repaid to zero.
The lender is assessing the business. Bank statements, trading history and existing commitments carry the file, because there is no invoice or machine standing behind it.
It is the wrong shape for a recurring gap. A facility that repays to zero and then has to be re-applied for is expensive for a need that returns every quarter.
The repayment is knowable in advance. Which is its genuine advantage. A fixed weekly figure can be planned against in a way a revolving balance cannot.
Indicative only. Every figure here is illustrative. Actual rates, fees and terms come from the lender after assessment.

The mechanism

What is actually being lent, and against what.

The lender advances a fixed sum and the business repays it on a schedule that runs to zero. Nothing revolves, nothing is redrawn, and the amount does not move with turnover. Where the facility is unsecured, the lender is relying on the trading position alone, and the pricing reflects that it has nothing else to fall back on.

Because there is no asset and no ledger in the middle of it, the assessment concentrates almost entirely on the bank statements. Patterns of income, how the account behaves through the quieter months, and what is already committed are the material the decision is made from.

That makes it the most accessible of the facilities on this site for a business with no receivables ledger and no assets to offer, and the most expensive per dollar for exactly the same reason. Both of those follow from the same fact.

Common amounts

$5k to $500k

Common terms

6 to 36 months

Security

Varies by lender

Repayment

Weekly or monthly

The test that matters

Whether the gap closes on its own.

A working capital gap is either an event or a condition. An event is a one-off: a large order to fund, a quarter where tax and a seasonal low collided, a supplier that changed its terms. It has a size, it has an end, and a term loan matches it well because the loan also has a size and an end.

A condition is different. A business that invoices on 30-day terms and collects on 50 has a gap that reopens the moment it is closed, and a term loan pays it down for the last cycle rather than funding the next one. Twelve months later the gap is unchanged and the loan is nearly repaid, so a second one is required, and the pattern repeats at a cost that compounds.

The question that separates them is whether the same shortfall will exist next quarter for the same reason. Where the answer is yes, a revolving facility or a receivables facility is the right instrument, and the fact that a term loan is easier to obtain is not a reason to use it. Where the answer is no, a term loan is straightforward, plannable and usually the cheapest way to deal with it.

Worked example

A $60,000 facility over eighteen months.

A wholesaler takes a $60,000 facility to fund a stock build ahead of a contract that will run for two years. The stock converts through the first six months and the contract pays monthly thereafter, so the gap has a defined shape and a defined end.

On an indicative 16% over eighteen months the repayment is in the order of $845 a week, and the total repaid is around $65,900. The $5,900 of interest is the cost of having the stock on the shelves six months before the contract paid for it.

The comparison worth making is against the margin on the contract rather than against another facility. Where the contract contributes several times the interest cost, the arithmetic is straightforward. Where it contributes a similar amount, the business is working for the lender, and that is worth seeing before the facility is drawn rather than at the end of it.

Illustrative figures

Amount: $60,000
Term: 18 months
Indicative rate: 16%
Indicative weekly repayment: ~$845
Total repaid: ~$65,900
Indicative cost: ~$5,900

Illustrative on stated assumptions and rounded. Not a quote or offer of credit.

Against the alternatives

When a term facility beats a revolving one.

Both fund working capital. They behave differently enough that the choice is usually clear once the gap has been described properly.

Feature	Working capital loan	Revolving facility	Receivables facility
Amount	Fixed at drawdown	A limit, drawn as needed	Moves with the ledger
Cost when unused	Full interest regardless	Little or none	Little or none
Repayment	Scheduled to zero	At the business’s discretion	As customers pay
Suits a gap that is	One-off and sized	Recurring and variable	Caused by payment terms
Planning certainty	High	Lower	Lower
Needs a receivables ledger	No	No	Yes

The second row is the one that decides most cases. A term loan charges for every dollar for the whole term whether or not the money is needed the entire time, which is efficient for a sized gap and wasteful for a variable one.

What lenders look at

Five things that carry an unsecured file.

A general description of what is assessed rather than any lender’s criteria, which are their own and vary considerably.

Bank statements

The most informative document by a distance. Income patterns, the behaviour of the account through quiet months and existing commitments are all visible there in a way a summary cannot show.

Trading history

How long the business has operated and how consistently. A short history is not disqualifying where the trading is strong, and it narrows the range of lenders willing to look.

Existing commitments

Total obligations rather than this one alone. An application that succeeds by itself can fail alongside two other facilities already running.

Credit history

Defaults and judgments, and the pattern behind them. An explained historical issue is a different proposition from an unexplained current one.

Purpose

What the money is for and where the repayment comes from. A specific answer reads differently from a general one, and it is asked in nearly every application.

The trade

What it gives and what it costs.

What it gives

A repayment figure that is known in advance and can be planned against
Availability to businesses with no receivables ledger and no assets to offer
A defined end, so the obligation does not persist indefinitely
Speed relative to a secured facility, since no valuation or title work is involved
Simplicity, with one amount, one rate and one schedule to compare

What it costs

A higher rate than a secured facility, because there is nothing behind it
Interest on the full amount for the full term, whether or not it is all needed
A poor fit for a recurring gap, which is what most working capital gaps are
A personal guarantee in many cases, which is a real obligation rather than a formality
A schedule that has to be serviced through the quiet months as well as the busy ones

The process

What an application involves.

Generalised rather than specific to any lender. This is the least document-heavy facility on the site.

01
Amount, term and purpose
What is needed, for how long and what for. A specific purpose with a specific repayment source is the strongest version of this and takes a few minutes to prepare.
02
Bank statements and entity details
Ordinarily several months of statements, entity and director details, and disclosure of existing facilities. A complete file at this point is the single largest influence on how quickly the rest moves.
Documents commonly required
- Bank statements
- Entity and director details
- Existing facility details
03
Assessment
The lender forms a view on serviceability from the trading position. Where the amount is larger, financial statements and management accounts come into it as well.
Documents commonly required
- Financial statements where held
04
Documentation and drawdown
The agreement is executed, any guarantee is signed, and funds are advanced. The repayment schedule starts from drawdown rather than from when the money is used.

No timings appear here. They vary by lender, by amount and by how complete the file is, and a page naming a number would be describing a promise nobody made.

When it goes wrong

Three situations worth understanding before drawing.

The gap reopens

The facility repaid the last cycle and the same shortfall appears again, so a second facility is taken alongside the first while it is still being repaid.

What happens:Two schedules running at once against one business, which is how a working capital problem becomes a debt problem.

Trading softens mid-term

The schedule does not adjust. A repayment sized against a good quarter still has to be met in a poor one, and unlike a revolving facility there is no discretion in it.

What happens:Pressure at exactly the point the business has least room, which is the cost of the certainty the schedule provides.

A guarantee is called

Where a director has given a personal guarantee, a default reaches beyond the company. The obligation is what the document says it is rather than what was understood at signing.

What happens:Personal exposure that is straightforward to see in advance and frequently is not read closely at the time.

The first of these is the most common and the most avoidable. It is answered by describing the gap honestly before choosing the instrument, which is a conversation rather than an application.

The honest limit

Where this facility stops being the answer.

A term loan funds a shortfall. It does not fix the reason for one, and where the shortfall is structural the facility buys time rather than a solution. Time is worth buying when something specific is going to change inside it, and it is worth very little when nothing is.

The other limit is price. An unsecured facility is priced for a lender with no fallback, and where the business does have receivables, assets or card takings, one of the other products on this site will ordinarily cost less. The convenience of the unsecured route is real and it is not free.

Where the gap is genuinely one-off, genuinely sized, and the repayment source is genuinely identified, this is a clean instrument and there is nothing clever to add to it.

The repayment

What a term facility costs each week.

A scheduled facility amortises to zero, so the output here is a repayment rather than an interest cost. Indicative only, and not a quote or offer of credit.

Indicative repayment

Weekly

Disclaimer

$870/week

$3,771 /month $7,885 total interest

Loan amount $60,000

$5,000 $500,000

Loan term 18 months

6 months 5 years

Indicative rate 16.00% p.a.

8% (secured) 30% (unsecured)

Apply directly with Prospa Why Prospa

Indicative only. Not a quote or offer of credit. Actual rates, fees, and repayments depend on the business profile and the lender's decision.

References

Sources

Commerce Commission
The regulator whose guidance covers lender conduct and disclosure obligations.
Financial Service Providers Register
Where a New Zealand lender’s registration can be confirmed before an application is made.
Companies Office
The register used to confirm entity and director details during assessment.
Reserve Bank of New Zealand, statistics
Context for why indicative rate bands move over time rather than being fixed figures.
Financial Markets Authority, financial advice
Backs the distinction between general information of this kind and regulated financial advice.

FAQ

Working capital loan in New Zealand, questions answered

What is a working capital loan?

A term loan used to fund day-to-day operating needs rather than an asset purchase. A fixed amount is advanced and repaid on a fixed schedule, and the lender assesses the trading position rather than an invoice or a machine.

How is it different from a business loan?

Mechanically it is not. The distinction is the use, and lenders present the same facility under both names. What matters is whether the repayment shape fits the gap, and that question does not change with the label.

Is security required?

It varies by lender and by amount. Many working capital facilities are unsecured, which is what makes them accessible and also what makes them more expensive. A personal guarantee is common even where no asset security is taken.

What does it cost?

More per dollar than a secured facility, because the lender has nothing to fall back on. Rates vary widely by lender, amount, term and applicant, and no site can say what a particular business will be offered.

How long are the terms?

Commonly between six and thirty-six months for working capital purposes. Longer terms lower the repayment and raise the total cost, and a term that outlasts the need is paying for money after it has stopped being useful.

Can it be repaid early?

Ordinarily yes, and the amount required is set by the agreement rather than by subtraction. Early settlement figures are not always simply the remaining principal, so obtaining the figure in writing before committing avoids a surprise.

When is a revolving facility better?

When the gap recurs. A term loan charges for every dollar for the whole term whether or not the money is needed throughout, which is efficient for a one-off and wasteful for a need that opens and closes each quarter.

What do lenders want to see?

Ordinarily several months of bank statements, entity and director details, existing facility details, and a clear answer on purpose and repayment source. Larger amounts bring financial statements and management accounts into it.

Does a short trading history rule it out?

Not necessarily, and it narrows the field. Lenders differ considerably on minimum trading history, and a business turned down by one on that basis is not turned down by the market.

Is a personal guarantee negotiable?

Sometimes, depending on the lender, the amount and the strength of the file. What is not negotiable after signing is what the document says, which is why it is worth reading as an obligation rather than as a formality.

What happens if trading softens mid-term?

The schedule does not adjust on its own. Raising it with the lender early is ordinarily better received than missing payments, and what can be done depends on the lender and the agreement rather than on any general rule.

Is this page financial advice?

No. It describes how a product works in general terms. This site is not a lender, a broker or a registered financial adviser, and whether a facility suits a particular business depends on facts a website cannot see.