Asset finance is money tied to a specific item, secured by that item. Unsecured working capital is money for running the business day to day, with nothing pledged as security. Choosing between them is less about which is better and more about what you are actually solving.
Two businesses can need the same amount of money for completely different reasons. One needs a delivery vehicle. The other needs to cover wages and stock while it waits to be paid. Those are different problems, and they call for different funding.
What is unsecured working capital?
Working capital is the cash that keeps a business trading. Stock, wages, rent, fuel and the gap between paying your suppliers and being paid by your customers.
Unsecured (working capital) funding covers that gap without you pledging anything. No property, no vehicle, no equipment. The assessment looks at how the business trades instead: monthly turnover, bank statement history and how long you have been operating.
For most South African small businesses that distinction decides everything. A salon, a restaurant, an online store or a service business can be trading profitably and still own almost nothing a traditional bank would accept as security. Assessed on assets, it gets declined. Assessed on trading, it can qualify.
What is asset finance?
Asset finance is funding for a specific item, usually a vehicle, machine or piece of equipment. The item itself acts as the security.
Because it is secured, the provider is exposed to less risk, so asset finance can be more affordable over a long term than unsecured funding. The trade-offs are real though. The money only buys the named asset, the application usually needs quotes and supplier paperwork, approval takes longer and the provider can repossess the asset if repayments stop.
It also does nothing for cash flow. Asset finance funds the machine. It does not fund the wages you still have to pay while the machine is being installed.
Comparing the two
|
What to compare |
Unsecured working capital |
Asset finance |
|---|---|---|
|
What you pledge |
Nothing. Assessed on trading history and turnover |
The asset being financed |
|
What the money can be used for |
Anything the business needs: stock, wages, rent, marketing or a cash flow gap |
Only the specific asset named in the agreement |
|
How it is assessed |
Bank statements, monthly turnover and trading history |
The asset value, supplier quotes and usually your balance sheet |
|
Typical speed |
Apply online in minutes, subject to assessment |
Longer, with supplier paperwork and valuation |
|
What happens if repayments stop |
No asset is repossessed, though arrears affect future applications |
The asset can be repossessed |
|
Cost structure |
With a GoTyme Business Advance, one fixed fee agreed upfront, no interest |
Usually interest over the term, plus fees |
|
Best suited to |
Trading businesses that need flexibility and do not own significant assets |
Businesses buying a specific high-value item they intend to keep |
The short version: if the problem is cash flow, unsecured working capital fits.
What does unsecured working capital normally get used for?
Unsecured business finance tends to get spent on timing rather than on things. The work is there and the business is profitable. The money simply has not arrived yet.
Four situations come up again and again.
- Stock before a busy season. A retailer buying ahead of December and a hardware store stocking up before a build cycle both pay for stock weeks before any of it sells.
- Wages through a quiet month. Trade dips in January or over the school holidays, but salaries, rent and delivery costs carry on.
- Waiting on a large client. A corporate or government client paying on 60-day terms is good business, right up until the invoice is out and the salaries are due.
- Taking on work you cannot yet fund. A bigger order or a new contract usually needs materials, staff and deposits before the first payment lands.
What links all four is timing. The money is needed before it is earned, and the pressure sits across several costs at once rather than on one purchase.
How do costs compare?
Cost is where these two are hardest to compare, because they are usually priced in different ways.
Asset finance is normally priced with interest that accrues over the term. Longer term, more cost. The headline rate is not the whole picture either, since initiation fees and insurance requirements often sit alongside it.
A GoTyme Business Advance is priced differently. One fixed fee is agreed upfront, with no interest and nothing compounding. You know the full amount you will repay before you accept.
Whichever route you look at, compare the same thing on both sides: the total amount you will have repaid by the end. Not the rate, not the monthly figure. Rates and instalments can be made to look small by stretching a term.
Where a GoTyme Business Advance fits
Most trading businesses don't need funding locked to a single asset. They need cash that moves with the business, and that's exactly what a GoTyme Business Advance is built for.
We offer unsecured funding of up to R5 million, so nothing in your business is pledged as security. You pay one fixed fee agreed upfront, with no interest. Repayments are either fixed on a set schedule or flexible, moving with your turnover. You apply online in minutes, subject to assessment.
Then you put it where the pressure actually is. Stock, wages, a fit-out, a second site or a client who pays late. Funding built around your business, not around what it owns.
See how a GoTyme Business Advance works.
*We do not offer asset finance.