Growing your business

Financing a business without assets

3 min read


Rapid technological change is disrupting many aspects of our lives, including the conventional ways we do business.

While traditional business models often require significant investment in tangible assets like plant or equipment, the digital revolution is breaking down such barriers, allowing entrepreneurs to create globally scalable businesses that are more reliant on intangible assets, like knowledge, technology and systems.

But this can create a challenge when it comes to finance. How do you access the funding you need to grow when your business has limited or non-traditional assets to offer lenders as security (and without diluting your equity in the business)?

Leveraging your cashflow

One option is cashflow lending, whereby a business is able to leverage the cashflow it’s creating from sales, as opposed to the assets on its balance sheet.

Cashflow lending is a potential option for businesses seeking working capital funding (used to finance the everyday operations of a business) or term debt funding (generally used to finance larger or one-off capital investments).

For businesses new to this type of funding, working capital can be a good place to start. Working capital facilities are designed to work with your business’ cashflow cycle and allow a business to pay for the outlay of any goods or services required earlier in its sales cycle, and then make repayments when money comes in from the customer at the end of the cycle. (Working capital also generally requires interest-only repayments, whereas term debt generally requires principal plus interest be paid back over a set period.)

There are a range of options for businesses seeking to leverage their cashflow to fund working capital. For example, if you’re importing goods from China for sale in New Zealand and you need to pay your offshore suppliers before the goods land here, then an import trade finance facility might work. Alternatively, if your business bills customers monthly and you need to pay wages to employees fortnightly, an overdraft might be a better option.

What kind of businesses does it work for?

While cashflow lending is an option for a range of businesses – including those with substantial assets – not all businesses will have strong enough cashflow to support it.

One of the keys to seeking this kind of funding is the ability to demonstrate a deep understanding of your business’ forward-looking cashflows. To put your best foot forward, the sort of information your banker would want to see to help with your funding wants and needs include:

● At least two years of historical financial statements (and preferably three).
● Financial forecasts for the next 12 months (monthly forecasts are standard).
● An understanding of any peaks and troughs in the cashflow cycle.
● A written business plan or strategy.
● A list of aged debtors and creditors.
● An understanding of any intellectual property the business holds, and how it’s protected.
● Any key contracts the business has entered into.
● A company structure chart and an understanding of the key people in the operation.

A final point: while this kind of unsecured funding can seem a little more expensive in some cases, it should be considered in a wider context. For a ‘weightless’ technology company, for example, leveraging cashflow may ultimately (and most likely) prove more cost-effective than parting with an equity stake.


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Modica Group is an example of a business that has used BNZ financing to grow their business without assets. CEO Stuart Wilson and BNZ Partner Tim Wixon discuss how the platform as a service company was able to grow so quickly: