small business financing options

The majority of small businesses will experience cashflow problems. Learn more about small business financing options to help you grow your business.

  • October 5, 2021
  • 4 min read
  • October 5, 2021
  • 4 min read

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Securing capital to start a business or to maintain a positive cash flow for the expansion and survival of an existing business is a stressful and challenging process. More so if you are a woman (as archaic as it sounds, women and minority business owners around the world have historically encountered gender bias when trying to raise capital according to research conducted by HSBC Private Banking).

two-step method

With the above mentioned in mind, if you’re a budding business owner, how would you rise above and acquire a healthy source of capital? All it takes is two things. Firstly, start by asking yourself these three questions before exploring funding options – ‘How much finance do you think you need’, ‘What is the nature of your business’, and ‘What is the stage of your business development (start-up or established)’. Secondly but most importantly, look into and narrow down the best business finance options to meet your needs.

did you know?

The latest SME Growth Index did show that 72.5% of small businesses generally experience cash flow problems. The silver lining (as stated in the article) is that though it seems like a relatively high amount, cash flow woes aren’t as bad considering the current economic environment.

small business financing options

Let’s explore the different ways you can finance your business:

Bank Products

Speak to your bank and ask them to share their finance options. They will be able to offer you the most well-known forms of starting capital and growth finance namely bank loans, overdrafts, and business credit cards. The latter is best for short-term funding to assist with covering costs during an emergency. Do pick a bank that is familiar with you or your industry as they’ll likely prioritise your cash flow projections and understand the capital requirements needed to support growth.

Angel Investor

As the name implies, angel investors are business people looking for businesses to invest in. In return for the funds, investors become shareholders within the company and will have a say in how the business is run. Though you can expect input and scrutiny, they will also bring along experience, ideas, and direction that may be extremely helpful to the business.

Invoice Finance

Best for growing businesses, this is a type of cash flow financing which allows you to use outstanding invoices as collateral. With invoice finance, up to 90% of the invoice amount can be accessed as ‘cash advance’ which is great especially since it can take 90 days to receive payment (based on your business’ net payment terms).

Asset Finance

Ideal when you need to rent or buy new or used business equipment and vehicles. This type of funding enables you to spread the cost of an asset over its lifespan, keeping cash available to run your business. Depending on the type of equipment, you can get funded up to 100% of the asset’s value.
The asset will be the security for the loan, however, sometimes, lenders might require additional secured guarantees.

Crowdfunding

Funds are raised online in the form of donations/contributions, loans, or even exchanging money for investor perks and equity in your business. You can do this via crowdfunding websites where you can set a goal for the amount you need to raise. To attract backers, planning is crucial as you’ll need to carefully craft your business spiel to show them why they should give their support.

Government Grants

Though the application process can be lengthy, complicated, and restrictive, grants are available on business.gov.au for a wide selection of industries. They are also low-risk options which means you might not have to pay any of the money back, making this a great choice for start-ups.

invoice finance solution

Thornmoney offers an invoice finance solution that allows you to turn unpaid invoices from your customers into fast funds within 24 hours since approval. With no lock-in contract, it is as simple as connecting your accounting software with our platform.

If you’re upgrading your fleet or business equipment, our asset finance products might be your answer.
We have loans available with tailored rates for your business and various payment terms up to 5 years. The options include chattel mortgages and rental agreements. Contact us today to figure out the best funding solution for your company.

apply for asset finance

  • Up to $1M in funding
  • Tailored rates
  • No hidden fees

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