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You have an awesome new idea for a new business. It has a unique value proposition that’s truly one-of-a-kind. It’s guaranteed to revolutionize the way people do business and make you a truckload of cash while at it. It’s a win-win any way you look at it.
There’s only one problem. One glaring deficiency that stands in the way of you making the Forbes List of Australia’s most successful entrepreneurs: Money.
Money does, indeed, make the world go round. Without it, your dreams of starting a successful business or even expanding your existing one will remain just that – a pipe dream.
So, you need to find a creative way to get funding to propel your enterprise to the next level. This article explores some of the top start up business loans Australia worth exploring.
Start Up Business Loans Australia
Before applying for a startup business loan, ensure that you line all your ducks in a row. You need to have proof that your business is headed in the right direction and that you’ve done all you could to get it off the ground.
Most investors will hardly ever put money into a business “idea”. They’ll likely be looking for one that’s already functional before they can inject any capital into it. Here are 12 more ways to get funding for your business.
1. Angel Investors
Unlike the other types of investors you’ll come across, angel investors are always on the hunt for the next big thing to invest in. Most of the top tech companies like Google, for instance, all have their roots in angel investment.
These types of investors usually require an equity stake in your company and will expect a return of more than 20%. But they are not usually easy to convince. So, your idea needs to be rock-solid.
2. Venture Capitalists
Venture capitalists are in many ways very similar to angel investors, except for the fact that they don’t invest in “ideas”. You need to have an already-established business, preferably within a fast-growth industry that provides an easy exit strategy.
They’re interested in having some measure of control in the day-to-day running of your business as well, so keep that in mind when sourcing for this kind of funding.
3. Crowdfunding
Crowdfunding is exactly what it sounds like. You would essentially be receiving funds in the form of donations – big or small – from a large number of people. Several online crowdfunding platforms exist to allow entrepreneurs to reach their fundraising target.
Some of the most popular ones include RocketHub, GoFundMe, and Kickstarter. It’s a source worth considering.
4. Family and Friends
Your family and friends have a vested interest in wanting to see you succeed. So, they’re more likely to invest in your business if you asked them to.
Keep in mind, though, that there’s always the potential for relationships to get strained if your business takes a hit.
5. Personal Financing
Before you can even approach a lender or any other kind of investor, they’ll expect that you are as equally as invested in your business as you want them to be. They’ll want to see that you’ve used your savings and perhaps even put up some of your assets as collateral to fund your enterprise.
This is especially true for grants. So, if you want to get external funding, you might want to start by investing what you already have.
6. Grants
If your business happens to be operating in a sector where large corporations, or even the government, are focused on driving development, you could apply for grants, or enter competitions that allow you to win grants that can go towards reaching your funding goals.
7. Home Equity
If you’re a home or property owner and have built up equity over time, you can release some of it and channel the funds towards financing your venture. This may require taking out a mortgage to release that equity.
It’s similar to taking out a long-term secured personal loan, except that the interest rates would be much lower, and the repayment period would be longer.
8. Sale of Assets
Before taking out a mortgage on your home, consider selling any other possessions you may have that can help you raise a decent amount of the funds you need. Think – garage sale or any other big-ticket items you might have but don’t need.
9. Purchase Order Financing
If you need to fulfil a large business order but lack the cash flow to do it, several lenders will extend you an advance based on this purchase order. They’ll then collect the cash – at a small margin of course – once you sell the goods.
In most cases, the companies in the manufacturing sector are most likely to qualify for these types of loans.
10. Vendor Financing
The ability to sustain your business, and keep it running as it should, largely depends on your sales revenue. So, it might be useful to negotiate for longer payment terms with your vendors.
This saves your business from incurring late fees and penalties on invoices that take longer than 30 days to settle, especially if your typical sales cycle is longer than that.
11. Invoice Financing
If your business is struggling to bridge the gap between invoicing customers and receiving payment, invoice financing could be the answer to your short term cash flow needs.
All you would have to do is sell your invoices to a non-bank lender. The company would then advance you the funds you need and receive payment directly from your customers.
12. Non-Bank Lenders
If your business doesn’t have enough credit history, it is practically impossible to qualify for a traditional bank loan. You can, however, go a different route and approach a non-bank lender for a startup business loan. You stand a better chance of getting the funding you need using this method.
Do Your Homework
Before accepting any form of funding, ensure that you read through the terms and conditions to see whether or not they align with your business goals. This protects your startup from anything that may end up hurting your business in the long run.
Do your homework as well. This may involve talking to other small business owners and lending sources to get all the information you need before you settle for a particular funding option.
Use our online tool to find and compare unsecured start up business loans Australia from 70+ different non-bank lenders, and get the funding you need in as little as 2 minutes!
