Why set up working capital before you need it?
Lenders read your business through its bank statements. When trading is steady — deposits arriving regularly, bills paid on time, no dishonours — the statements tell a good story. When you’re already stretched, they tell that story too: supplier payments slipping, the account hovering near zero, an ATO balance building.
That’s why the best time to arrange working capital is before you need it. Think of it like booking the tradie before the storm season rather than during the first downpour.
What does “standby” mean in practice?
Usually it’s a business line of credit with a rule attached: we only draw on it if a specific trigger happens. Typical triggers include:
- A customer who makes up a large slice of revenue pays more than 30 days late.
- The quiet season runs three or more weeks longer than planned.
- Equipment the business can’t trade without breaks down.
- A BAS, PAYG instalment or payroll run falls due before seasonal income arrives.
Writing triggers down feels formal, but it stops a standby limit sliding into everyday spending.
Who gets the most from standby capital?
Businesses with one or two dominant customers
Example scenario — illustrative only. An engineering workshop in Newcastle does most of its work for one mining services client. If that client moves its payment run from 30 to 60 days, the workshop still has to pay wages and super. A standby facility means one late payment doesn’t turn into a missed payroll. The Payment Times Reporting Regulator reported that in the first half of 2025 the slow end of large businesses’ payment times (its 95th percentile measure) stretched from 58 to 64 days — a reminder that “30 days” on an invoice isn’t a promise (source).
Businesses with a known low season
A Cairns reef tour operator knows the wet season looks nothing like the dry. A Thredbo lodge knows December is not August. Standby funding lets these businesses hold on to trained staff through the quiet stretch instead of letting them go and rehiring before the next peak.
Growing businesses
Growth consumes cash. A bigger contract means buying materials, paying labour and running vehicles for weeks before the first invoice is paid. A facility arranged ahead of the growth spurt lets you accept the work with confidence.
What do lenders look at when you set it up?
The assessment is the same as for any unsecured line of credit, which is exactly why timing matters:
- Turnover — the size and consistency of what flows through your business account.
- Bank statement conduct — dishonours, how close to zero the account runs, and existing loan repayments.
- Time trading — usually six months or more.
- Credit history — weaker credit is considered in context rather than being an automatic no.
Sole traders, companies, partnerships and trusts can all apply for business purposes, and decisions are sometimes made the same day. Keeping business income in a dedicated business account, separate from personal spending, makes your statements far easier to read.
How do you size a standby facility?
Start with a cash flow forecast. business.gov.au offers a free cash flow statement template you can use to project the months ahead. Then:
- Run a pessimistic version — late debtors, a slower season, a price rise from a key supplier.
- Find the lowest point in that version across the next twelve months.
- Add one extra month of fixed costs as a margin for what you haven’t foreseen.
- Compare the result with what your turnover is likely to support.
If the gap is bigger than an unsecured limit will reach, pairing a smaller standby line with a property-secured top-up of $20,000 to $1m is worth discussing.
How does standby capital compare with a cash reserve?
| Cash reserve | Standby facility | |
|---|---|---|
| Where it sits | Your own bank account | With a lender, undrawn |
| Built from | Retained profit | An approved limit |
| Speed to use | Immediate | Usually fast once set up |
| Best for | Small, frequent surprises | Larger or longer gaps |
| Trade-off | Slow to build | Must be repaid once used |
The strongest position is to have both. Our guide to building a cash buffer shows how to grow the reserve without starving the business of working capital.
What does it cost to keep capital on standby?
That depends on the lender and your business, and we’ll lay it out clearly before you commit. We don’t publish headline rates: every facility is priced on your individual circumstances, and we look for the sharpest option available for your situation.
How do you arrange it?
Start with the 60-second enquiry and tell us it’s for standby use. A lending specialist will ask about your seasons, your biggest customers and your tax calendar, then explain the options that fit. Enquiring is free and doesn’t affect your credit score. If tax timing is the main worry, read paying the ATO on time as well.