Fund your business

Understanding the basics of raising capital is a vital business skill. You will need money whether you're looking to start a new business or grow your existing business.

When exploring funding options, consider:

  • the amount of finance required
  • the nature of your project
  • your stage of business development (i.e. a start-up or an established business).

On this page

    Seek professional advice

    Every business will have different reasons for sourcing finance and every funding proposal will have its own unique features. Seek professional advice from your accountant or business adviser before making a financial decision.

    Potential sources of funding

    There are 3 basic sources of funding:

    • equity finance—investing your own or other stakeholders' funds into your business in exchange for partial ownership (e.g. venture capital)
    • debt finance—borrowing funds that you pay back with interest within agreed time frames (e.g. bank loans)
    • other—raising funds through other sources that may not need repayment or to provide an ownership stake in your business (e.g. crowdfunding).

    Your business may need to be more mature to access some of these types of funding.

    • Self-financing
    • Family and friends (who take a share of your business)
    • Business angels
    • Strategic investor
    • Private equity
    • Venture capital
    • Initial public offering (IPO)

    Learn more about equity finance.

    • Family and friends (who you agree to repay)
    • Banks
      • Term loan
      • Line of credit
      • Working capital
      • Leasing
      • Asset backed

    Learn more about debt finance.

    • Crowdfunding
    • Government
    • Incubators
    • Accelerators
    • Hybrid securities

    Create a funding plan

    The first step in securing funding is to draft a business plan. Whether you are starting a business or looking to grow your existing business, your business plan is the key document that guides your future operations. It also makes your business goals clear to potential investors or lenders and explains how you are going to spend your invested or borrowed money (i.e. your financial strategy).

    Your business plan should include a detailed funding plan and 12-month cash flow budget that explains:

    • how much money will be required
    • when the money will be required
    • where the money will be sourced
    • what the money will be used for
    • when debts will be paid back
    • when investors can expect to see returns.

    Try to identify all the likely costs involved in your business:

    • start-up capital (e.g. office equipment, plant and machinery, building costs, shop fittings, licences, permits, insurance, bond or premises costs)
    • operating capital (e.g. salaries/wages, rent, expenses, supplies, utilities, advertising/marketing, interest repayments, depreciation)
    • contingency funds—to survive rough periods until your business becomes profitable or during periods of low cash flow.

    Find out how to calculate your costs when starting a business.

    Carefully evaluate your business idea. Having a thorough understanding of its strengths and limitations will help define your financial requirements and identify your most likely sources of funding.

    Seek professional advice

    We strongly recommend you review your plan with your accountant or business adviser.

    Apply for funding

    You need to be well prepared and professional when applying for a bank loan or approaching potential investors. Providing the following information will help give potential lenders or investors the confidence to fund your business idea.

    Make sure you have a credible business plan containing well-researched evidence that a market exists for your product or service. You must document:

    • the history of your business
    • your previous business experience (if you are starting up)
    • how your business's goals can be achieved
    • market research and contingency plans to compensate for market changes
    • other external factors that could affect your business.

    Include these details for lenders/investors:

    • the amount of funds required
    • the purpose for the funding
    • preferred repayment terms
    • security offered for the loan
    • the basis for your estimated sales
    • evidence to confirm your major expense items
    • your 12-month cash flow budget.

    Top tip

    Use our market research kit to find key market and industry information to develop or enhance your business and funding plans.

    Provide detailed financial data in your plan, including:

    • balance sheets
    • profit and loss statements
    • cash flow statements
    • tax returns and business activity statements (BAS)
    • any other relevant information.

    If you are a new business, make sure you draft detailed financial projections. A statement of personal assets and liabilities should identify which of these are in your name exclusively and which are in joint names. A personal financial statement lists what you own (your assets) and what you owe (your liabilities). It can be viewed as a snapshot of your financial health at a particular point in time.

    Learn more about creating financial statements for your business.

    Offering security to help secure finance

    Banks are conservative and more risk-averse than investors, so you need to make them feel as safe as possible. Include details of security available to back the loan up if necessary, and details of any debt secured by way of mortgage, bill of sale or other means.

    Lenders are reluctant to take third-party security from family members, especially if those family members are at an age where there would be difficulty replacing the asset during their working life.

    Repayment information

    Formulate a clearly defined repayment plan that allows for interest rate rises during the period of the loan. Investors will have very detailed ideas about when they expect to see a return on their investment.

    More funding options

    Your business may be eligible for financial assistance from the Australian, Queensland or local government. There is a wide range of funding programs to help new and established businesses grow and succeed.

    Learn more about finding grants and business support.

    The Australian Taxation Office (ATO) can help you understand tax incentives available for early stage investors and research and development.

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