Why arrange funding before you need it?
Every lender reads your business through its bank statements. When trading is steady — deposits regular, bills paid on time, no dishonours — those statements tell a good story. When you’re already in a squeeze, they show it: tax arrears, supplier payments slipping, the account running close to empty.
That’s why the smartest time to arrange working capital is when you don’t need it yet. It’s the business equivalent of fitting the spare tyre before the road trip.
What does “standby” look like in practice?
Usually it’s a business line of credit with a deliberate rule attached: we don’t touch it unless something specific happens. Examples of those triggers:
- A customer representing a big share of revenue pays more than 30 days late.
- A quiet season runs three or more weeks longer than planned.
- Equipment the business can’t trade without fails.
- A tax payment lands before seasonal income does.
Writing the triggers down sounds pedantic, but it stops standby capital sliding into everyday spending.
Who benefits most?
Businesses with one or two large customers
A Tauranga engineering firm doing most of its work for one port-side client is exposed if that client restructures its payment run. Standby capital means one late payment doesn’t become a missed payroll.
Businesses with known low seasons
Cafés in Wānaka, surf schools in Raglan, landscapers in Dunedin — anyone who knows June looks nothing like January. Standby funding gives the business room to keep good staff through the quiet months instead of letting them go and re-hiring in spring.
Growing businesses
Growth eats cash. Winning a bigger contract usually means paying for materials, labour and fuel weeks before the first invoice is paid. A facility arranged ahead of the growth spurt lets you say yes to the work.
How do you size a standby facility?
Start with your cash flow forecast. The business.govt.nz Cash Flow Forecaster is a free place to begin, and it recommends running pessimistic, realistic and optimistic scenarios. Then:
- Find the lowest point in your pessimistic scenario across the next twelve months.
- Add your fixed costs for one extra month as a margin for things you haven’t foreseen.
- Compare that with what a lender is likely to offer based on your turnover.
If the gap you need to cover is larger than an unsecured limit is likely to reach, a property-secured loan of $20,000 to $1m may be worth pairing with a smaller standby line.
What does it cost to keep capital on standby?
That depends on the lender and your business, and it’s something we’ll lay out clearly before you commit. We never publish headline rates: every facility is priced on your individual circumstances, and we look for the sharpest option available for your situation.
Standby capital versus 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 | Instant | Usually fast once set up |
| Best for | Small, frequent surprises | Larger or longer gaps |
| Downside | Slow to build | Must be repaid once used |
The strongest position is to have both. Our guide to building a cash buffer walks through how to grow the reserve side without starving the business.
How to arrange standby working capital
Start with the 60-second enquiry. Tell us it’s for standby use. A lending specialist will ask about your seasons and your biggest risks, then explain which options fit. Enquiring is free and doesn’t affect your credit score, and if you’d rather talk first, call us on 09 875 4577.