Financing options for your small business
Four out of five people in Australia don’t start their small business because they don’t know how to access capital.
But this doesn’t have to be the case. There are several avenues to tap into to get finance and realise your dream as a business owner. These include:
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- Business loans
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- Commercial loans
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- Lines of credit
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- Home equity loans
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- Franchise funding
- Venture capital
The question now is, how much money does your business need?”
Sadly, a lot of small businesses fail not because they’re offering a poor product but because they run out of cash. As well as set-up costs you also need to consider your living expenses whilst you get to income generation stage.
In terms of looking at your finance options, we cover some below:
1. Loans
You can also apply for a business, commercial loan or home equity loan.
Business loans offer to finance for business purposes and the interest cost associated with the loan is generally tax deductible.
Commercial loans offer financing for the purchase of commercial property, commercial property development or business purchase.
If you have limited cash, you could also access the equity in your home.
2. Lines of credit
Opening a line of credit can also be a good idea because you can use the money up to a certain cap. The advantage of a line of credit is that you only pay interest as you draw down money.
But one big watch-out! Be mindful of higher interest rates.
3. Franchising
“There are a number of new lending products to help those buying into a franchise,” said Scott.
4. Venture capital
Lastly, venture capital (VC) describes where a lender gives you funds in return for a stake in your business. The further your idea is from fruition, the less likely the venture capital or VC firm will be to give you the money, and the more equity they’ll want in return.
Always speak to a business and loan expert
As you can see there are many financing options out there to start your business but you need to understand which ones will best work for you.
Need help getting started?
Whether you plan to rent, buy or sell, the support of good local property and real estate specialists can make all the difference.
Tradebusters Connect has a Top 3 Local Business Pick list of recommended property professionals in your local area to help you navigate the process.
Other Useful Links:
Financial Adviser Canterbury-Bankstown
Financial Adviser Chatswood & Upper North Shore
Mortgage Broker Eastern Suburbs
Mortgage Broker Hills District & Castle Hill