Small businesses are pivotal in Australia’s economy, contributing significantly to its Gross Domestic Product (GDP). However, as a small business owner, you wear many hats and often, securing funding and managing cash flow is up to you. Whether you can source funding and understand the options suited to your circumstances can be confusing. 

Despite their size, small businesses like yours have a profound economic impact, creating jobs, fostering innovation, and driving competition. However, changes in the broader economy such as interest rate rises can significantly affect their stability and revenue generation.

Cash Flow Concerns for Small Businesses

Cash flow is a common concern for many small businesses. Managing income and expenses can be a delicate balancing act, with factors such as late payments, seasonal fluctuations, and unexpected costs potentially leading to cash flow problems. You may need to carry the cost of delivering a project until it is completed and the client pays you. This means that paying wages, loans and the day-to-day of your business falls on you until that final invoice is paid. 

Risk Profile and Funding Requirements

A company’s risk profile plays a crucial role in determining its access to funding, and can shape what options are available to you. Lenders assess factors such as credit history, profitability, and market conditions to gauge the risk associated with providing funds to a business. 

The amount of funding you require can vary depending on the business’s growth stage, from initial start-up costs to freeing up funds to carry a large project or expansion plans.

Overview of Funding Options for Small Businesses

Various funding options are available to small businesses, each with its own advantages and disadvantages.

Bank Loans

Bank loans are a common source of funding for small businesses. They offer a lump sum of cash that can be repaid over a set period. However, obtaining a bank loan often requires a solid credit history and collateral, which some small businesses may struggle to provide. 

With a bank loan, you may provide security against the loan, such as your house. But the financial institution typically does not gain a stake, or equity, in your business like with venture capital funding arrangements.

Venture Capital

Venture capital is another funding option, where investors provide funds in exchange for equity in the company. This can be a substantial source of funding, particularly for high-growth startups. However, it also means giving up a degree of control over the business.

It can be beneficial for those seeking an experienced partner to help guide the business, but it may not be a suitable option if you want to retain control over the decision making for your business.  


Crowdfunding has emerged as a popular funding method, allowing businesses to raise funds from a large number of people, typically via the internet. Several Australian small businesses have successfully leveraged crowdfunding platforms to launch their products and services.

Often Crowdfunding comes with offers or tiers for the funding. For instance, a new wearable tech company might offer its tech when ready in exchange for funding.

Other types of business loans

SMSF lending

Although you can’t use your Self-Managed Super Fund (SMSF) to purchase a home to live in, you can use your SMSF to acquire your business premises. This is not a simple process and you should chat to your financial adviser before making changes to your super. There are also some obligations such as paying your SMSF market rent that you need to adhere to. 

Some people consider this arrangement to provide certainty when renting a premises. 

Line of Credits & Credit Cards

Depending on the amount that you need to borrow, there are other funding options available such as credit cards and a line of credit. Although these types of funding can be quick to secure and fix a short-term cash flow challenge quickly, they often come with high-interest rates and it is recommended to check your rates and that you are capable of repaying your loan before you sign anything. 

An ill-fitting solution can amplify, rather than alleviate your financial stress. This makes it vital to fully understand your funding options and make informed decisions that support your business to grow. 


Terms are subject to approved persons only. This information is true and correct as of 19/08/2023.  All of the content above is general in nature and may not suit your personal needs, situation objective & goals.