How you can still get funding for your business in 2020

Businesses across Australia have been hit hard by the forced restrictions and shutdowns of the past few months. However, entrepreneurs and business owners wanting to green-light a new business venture will have also felt highly restricted from the finance options available to them during this risky time for lenders.

There are ways businesses can still secure funding during this time. However, before seeking finance, revisit your business plan to make any adjustments to adapt to the current economic climate.

Government grants

Free government grants specifically for small businesses are available in Australia and can be an excellent way of securing funding without needing to provide collateral. Before the global pandemic, there were more than 300 government grants and financial assistance initiatives on offer to eligible businesses, including:

• Accelerating Commercialisation (AC) Grant - up to $1,000,000 in matched funding to enable commercial products to enter new markets.
• Export Market Development Grant (EMDG) - a 50 per cent reimbursement (up to $150,000) on costs relating to businesses promoting their products and services overseas.
• Australian Renewable Energy Agency (ARENA) grants for renewable energy businesses.
• The Enterprise Solution Centre - up to $100,000 to support businesses working in the agribusiness sector.

There are currently a number of COVID-19 assistance packages in place as well, both on a federal and State level, which can assist with writing-off assets or delaying tax in certain circumstances. You can find a full list of currently available federal and State government grants based on your eligibility at the Australian Government website for business at Business.gov.au.

For example, in NSW, eligible small businesses will benefit from up to $3000 of funding under the new Small Business Recovery Grant, with applications opening on 1 July.

The funding is designed to help businesses safely relaunch their operations. In Queensland, the State Government has announced a second round of grants for small businesses which will see eligible small businesses receive up to $10,000.

Venture capital funding

Even in times of financial crisis, investors will still allocate finance to a business with a solid business plan, provided it accounts for the current state of the economy and details how the company will operate successfully. If you truly believe in your business idea and can illustrate this in your business plan, securing venture capital investment during the pandemic is certainly possible, and displays the strength of your product or services even in times of difficulty.

Business loans

Businesses who need financial support during this time may consider taking out a business loan. However, business owners should carefully consider whether doing so is a responsible and financially beneficial option. Not all business loans or lenders are the same, and you may find that certain types of business loan - such as invoice financing or a chattel mortgage - may benefit certain types of business more than another.

You will also need to consider who you are choosing as a lender. For example, banks may offer lower interest rates but require a drawn-out application and approval process. On the other end of the scale, online lenders may charge higher interest rates, but often provide same-day, or next-day, approval.

If you are considering a business loan during this time, the most important thing to do is accurately assess your ability to repay the borrowed amount and speak to a financial adviser about whether taking a loan is suitable for your circumstances.

Businesses can acquire funding in many ways, and how you choose to fund your business will depend entirely on your eligibility for specific grants and business finance. One of the most critical aspects of this will be your business plan - a document which outlines in detail how you plan to use the money for your business, and your ability to forecast revenue and profits in the future.

Revisiting this before applying for funding will not only show your ability to adapt your business during a time of financial crisis but also prepare you for the reality of operating your business in the months and years ahead.

Helen Baker is a financial adviser, author, speaker and spokesperson for online finance information platform Money.com.au. Helen has a passion for empowering Aussies to find financial freedom through strategic planning and goals-based financial advice. She has worked as a qualified financial adviser since 2009 and was a finalist in both the Financial Planner/Advisor of the Year and Women’s Community Program of the Year categories in 2017 as well. For more information, visit Money.com.au.