Why You Should Consider Alternative Financiers for Working Capital Finance

Self-Employed | 18 Nov, 2020

Banks aren’t the only options for working capital finance available. Here’s when you might consider alternative financiers for working capital.

When it comes to financial performance, business owners tend to fixate on the bottom line. Of course making a profit is important, and it can be an indicator of how well your business is succeeding. But it’s certainly not the only one. In fact, your working capital number might be the most important indicator on how future proof your business actually is.

Working capital shows you the amount of cash you have available to operate your business while still being in a position to meet your obligations. And working capital finance to fund business needs is the number one reason that small Australian businesses seek financing. For example, the recent COVID-19 pandemic left many businesses without the cashflow to operate. And the current recession may have a similar effect on many other businesses as well.

At the end of the day, working capital is the difference between staying afloat, and sinking fast. And during tricky times it’s more important than ever to manage that well.

Why You Should Consider Alternative Financiers for Working Capital Finance

When it’s time to consider obtaining working capital financing, most business owners will immediately consider the big four banks. But banks aren’t the only financing solutions available. And they aren’t always the best choice either.

Here’s when and why you might consider alternative financiers for working capital.

Opportunity Cost of Time

True cashflow financing, from lenders such as Banjo Loans, Prospa or Get Capital, does come at a higher cost compared to bank funding. However, these lenders are also more flexible, more responsive and better able to get you the funding that you need within a useful timeframe.

Banks are currently swamped with administration relating to pause arrangements and other COVID-related responses. In fact, finance requests are taking more than four weeks to be considered and responded to. When it comes to working capital – the money that keeps your business operating – four weeks can often be much too long. And this leaves businesses at risk for cashflow difficulties that can have long-term consequences.

In these situations it makes sense to run the numbers on alternative financiers. Yes, the costs of the funding may be higher, but what level of profit will you achieve from the investment? What is the timeframe of the funding? And what is the opportunity cost of not having that cash available to pay your employees or other obligations for 28 days or longer?

After completing the calculation, consider whether the numbers make sense from a business viability perspective. If they do, it’s worth taking this alternative path to working capital financing.

True Availability of Financing

Another thing to consider is the ‘true’ availability of working capital financing from banks. While banks do sell their products as ‘cashflow lending’ this is often more lip service than actual service. Often ‘cashflow lending’ is held in reserve for business loans or overdraft that’s backed by property or by a business that has inherent valuation ideals (such as financial planners, insurance brokers or accountants).

It could be extremely detrimental to your business to wait the four or more weeks for your money to flow through only to find that your financing has been denied by the bank for policy reasons.


Getting funding for working capital is often essential for the success and growth of a business regardless of external pressures. Considering all your options, both bank and non-bank lenders, studying the numbers and understanding the costs (both in true value and inherent in the choice) can see you in a strong position to ride out any downturns.

Get in touch if you’d like to speak to us about alternative financing for your working capital.


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