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What is working capital and how can a small business loan help?

by OnDeck Australia,   May 04, 2023

As an Australian small business owner, you may have come across the term “working capital” when managing your finances. But what is working capital, and why is it so important for your business? In this article, we will dive into the details of working capital, its importance, and how an OnDeck small business loan can help you with your working capital needs. 

What is Working Capital? 

In simple terms, working capital is the money that a business has on hand to cover its everyday business operations. It’s the cash that’s available to cover operational costs and pay for things like rent, utilities, inventory, unpaid invoices, marketing expenses, and payroll. Working capital is a measure of a business’s liquidity, or its ability to pay its bills and meet its financial obligations in the short term. 

Working capital is calculated by subtracting a business’s current liabilities from its current assets. Current assets include cash, accounts receivable, and inventory, while current liabilities include accounts payable, taxes owed, and other short-term debts. For more about how to calculate working capital, check out one of our other small business blogs here. 

There are multiple ways businesses can handle their working capital. Business credit cards provide a long-term solution for businesses with consistent issues, but can easily put your business in a loop, stuck paying off just the interest rate and getting stuck with repayment fees month after month. Working capital loans provide a short-term financial boost that gives your business a chance to breathe and recover. 

Why is Working Capital Important? 

Working capital is critical for the success of any business, particularly for small businesses. Here are some reasons why: 

Covering day-to-day expenses 

Working capital ensures that a business has the cash it needs to cover its daily expenses, such as rent, utilities, and payroll. 

Managing cash flow 

Working capital helps a business manage its cash flow and avoid cash shortages, which can lead to missed payments, and other financial problems. 

Seizing opportunities 

With sufficient working capital, a business can take advantage of relevant opportunities as they arise, such as buying inventory at a discount or expanding into a new market. 

Weathering tough times 

During tough economic times or unexpected events, having a healthy level of working capital can help a business weather the storm and continue to operate.

How can an OnDeck working capital Loan help? 

One of the biggest challenges that small business owners face is managing their working capital needs. In many cases, businesses may have a short-term cash flow problem, but may not want to take on long-term debt. 

This is where an OnDeck working capital loan could assist. OnDeck loans are designed to provide small business owners with the working capital they need to manage their day-to-day expenses, seize opportunities, and weather tough times with a boost to their short-term financial position. 

Benefits of OnDeck small business loans for working capital: 

Fast funding 

OnDeck’s working capital loan application process is fast and easy, with funding provided in as fast as 2 hours*. 


Our loans are flexible and can be used for a variety of purposes, including working capital, inventory purchases, equipment upgrades, and more. 

Unsecured loans 

OnDeck offers unsecured loans, which means that borrowers don’t need to put up collateral to secure the loan. 

Personalised service 

At OnDeck, we understand that every business is unique. That’s why we offer personalised service and loan options that are tailored to the specific needs of each borrower. 

In conclusion, working capital is critical for the success of any small business. It ensures that a business has the cash it needs to cover its daily expenses, manage cash flow, seize opportunities, pay wages, and weather tough times. An OnDeck small business loan can help small business owners manage their working capital needs by providing fast funding, flexible loan terms, competitive interest rates, and personalised service.  

Working capital commonly asked questions 

Is your business eligible for an OnDeck loan? 

If your business has: 

  • Minimum $100,000 gross annual turnover 
  • Minimum 1 year in business 
  • Minimum 500 business credit score  
  • No bankruptcy (prior or recent) 

Then you are eligible to apply for a working capital loan with OnDeck. 

Is a working capital loan good or bad? 

Having extra working capital finance can be very useful to ensuring a business runs smoothly, giving you the ability to access funds when they’re needed. A working capital loan can be a viable short-term alternative to the commitment of a business credit card or a business line of credit, giving a once-off boost to your business finances. 

What is the difference between an SME working capital loan and business loan? 

A working capital loan is just a type of business loan, one that is used for day-to-day costs such as bills, maintenance of the company’s current assets, paying suppliers, and managing cash flow. Other types include secured or unsecured business loans & short term loans,  


This article is for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. OnDeck is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. OnDeck is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website. 
* The timeframe required to process and fund loan applications may vary for each individual application. Factors such as the completeness and accuracy of application materials, verification processes, and external circumstances can influence the processing & funding timelines. 


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