Small business finance without the headache
While SMEs account for 97 per cent of Australian businesses, it can still be difficult to make a case to a bank when looking for finance to start a new business or invest in the growth of an existing one. The good news is that applying for commercial finance through a bank is far from the only option.
Personal loans
A relatively young enterprise that doesn’t have a track record of success may not be looked upon favourably by banks, which make decisions based on risk. A lack of documented history doesn’t aid a business loan application, so for those who still want to go through the bank they use for transaction accounts, a personal loan could be the way to go.
Private funding
Private funding is when individuals lend through a trust account. While it can be a little more costly than the average business loan, it carries the advantage of flexibility.
Raise the money
Crowdfunding can help raise the funds needed to finance a startup or a product. The two main types are equity crowdfunding, where a share of the business is offered in return for funds, and rewards crowdfunding, where a product or service is pre-sold prior to the launch of the business or product.
While it may seem like the most hassle-free approach, with no applications or forms required to be filled out, it does entail high risks. According to crowdfunding platform Indiegogo, the success rate for small businesses is extremely low, with only 3.1 per cent reaching their goals in 2015.
Talk to a broker or a non bank lender
Skipping the banks entirely and talking to a commercial finance broker or non-bank lender means gaining access to myriad finance products and loan types, as well as expertise in matching your needs to the right loan type.
