Opportunities for Small business funding in Australia
conglomerates on the Australia economy. The country’s small entrepreneurs have always formed the backbone of the Australian economy employing the majority of the country’s labour force. In spite of their energy and vitality, the small business funding Australia have also fallen on hard times in the recent years due to the prevailing global economic recession coupled with the fact that many of these small businesses rarely survive the first years of operation.
Only 51% of Australian small businesses will be around after 4 years. Funding is therefore crucial to keeping Australia’s small businesses in operation and there are many opportunities for small business funding in Australia which small businesses can leverage so as to compete both in the local markets, regional markets in the Asia Pacific region and finally , in the global marketplace. Some of the funding sources which small businesses in Australia can use to weather the tough business environment include small business grants from the Australian government, debt funding from financial institutions, trade credit from small business suppliers, and equity funding from private investors.
Each of these opportunities for small business funding in Australia do have their benefits and drawbacks and business need to evaluate the risks associated with pursuing each line of funding. Australian government grants are by far the most attractive source of Small business funding Australia due to the zero cost of small business grant acquisition but with tens of thousands of businesses pursuing limited grant funding every year, it may not be a guaranteed source of business funding. In an increasingly tough business climate where business are facing fierce competition and operating on very small margins, uncertainties cannot be entertained.
One sure financing source which small businesses can access with a good degree of certainty is debt funding from financial institutions but here again businesses face the challenge of the high cost of acquisition. Interest rates are skyrocketing and this coupled with the fact that financial institutions regard small businesses as risky borrowers make this one of the costliest source of funding for small businesses. The risk with small businesses is the relative volatility of their income streams as compared to large businesses. Large businesses are thus able to access credit at relatively lower interest rates over small businesses which give them an additional leverage in the marketplace. They can thus weather the tough business environment more comfortably compared to small businesses which simply crumble due to stiff competition and underfunding.
Equity funding is also an attractive option although some small business owners may be wary about relinquishing control of their businesses to an equity holder. A better compromise would be to focus on internal equity funding from profits and other sources as opposed to external equity funding which may force a business owner to cede some control and independence. External equity funding is also generally very difficult to source as compared to other sources of small business funding Australia.Australia remains a “small business nation” in spite of the role played by the big mining and financial