Reasons and options for seeking finance
Last Updated: 18 November 2019
Cash flow fluctuations
Cash flow is one of the most common reasons businesses seek finance. But before you do, carefully analyse your cash flow. Some of the finance options include:
- overdraft facility
- line of credit
- fully drawn advance
- factoring
- invoice financing
- loan/cash flow lending
- trade credit from suppliers
- credit card (be careful – they should fund very short-term working capital needs)
Inventory – goods you hold to sell
You may require finance for the purchase of stock to sell (your inventory). Do you need to pay upfront or when the goods are delivered? If you’re selling inventory, it might be worth asking larger clients to pay a deposit to help you financially.
Some finance options include:
- a line of credit
- a commercial bill
Starting your business
Whether you're starting a business from scratch or buying an existing business or franchise, some finance options include:
- a loan
- a fully drawn advance
- venture capital
- private investors (such as business angels)
- crowdfunding
- self-funding
Note: Investors such as business angels and venture capitalists may expect some level of self-funding or existing equity in the business before investing.
Exporting overseas
Another way of growing your business is by exporting overseas. Some finance options include:
- a loan
- venture capital
- bonds, finance and guarantees to help exporters declined by other lenders from the Export Finance Australia
- government grants
Research and development
As well as traditional sources of finance there is also government finance available. Some options include:
- government grants
- venture capital
- private investors such as business angels
- the R&D Tax Incentive
- crowdfunding
Business survival
Do you need finance for growing debt to survive tough times? Before you consider further debt, first try to improve your financial position. Some options include:
- government grants for disaster-affected businesses
- financial counselling services
- personal counselling services
Once you have done all you can, talk to investors or a lender about finance options to improve your situation.