Last year, the Reserve Bank of Australia made a statement to the federal government’s financial system inquiry. It brought to light the number of SMEs using funding methods such as mortgaging their homes and credit card debt to keep the business running.
Such extremes are neither rare nor ideal for a struggling new or small business. According to the New South Wales Chamber of Commerce, lack of access to finance is the number one barrier to innovation.
Here are four ways you may be able to find additional funding for your SME.
1. Talk to an accountant
While an accountant does seem like the obvious option, it appears that not many SMEs have tried this avenue of freeing up funds, saving costs and bringing in new cash flow.
In fact, in the 2011 CPA Australia Asia-Pacific Small Business Survey, only 39 per cent of businesses used an accountant for advice when they needed finance.
An accountant’s knowledge of laws, services, taxes – and even loopholes – are second-to-none, and could be an on-going avenue of helpful and practicable advice.
2. Talk to Efic
For businesses that have export operations, they may be able to access finance from Australia’s export finance agency, the Export Finance and Insurance Corporation.
In late 2014, Efic was granted new capabilities that allowed the organisation to lend directly to small businesses for the export of all goods. Previously, the rules only applied to capital goods, which means there may be some SMEs who are eligible for financial aid that aren’t currently using this source of funding.
Plus, the minimum support threshold dropped from $500,000 down to $200,000.
Crowdfunding is no longer the left-of-field money raising idea it once was. The idea is that you share a description of your SME and the reason why you need the funding, and hope that the money trickles in from countless investors locally and internationally.
There are many website platforms to do this, and there are a number of ways it can work. For some, you will set a target of funds you wish to raise, and if you reach it, you pay a fee to the website. If you don’t reach it, you don’t get the funds, and your investors get their money back.
Some systems will ask you to offer rewards for donations, such as a basic thank you note from the founder, free advertising on your website, or a promise for use of free/discounted products or services.
This form of funding has become so popular that the European Union has put together a guide for SMEs who want to pursue crowdfunding.
4. Apply for grants
Despite the fact that there are somewhere in the vicinity of 400 grants available to Australian businesses, many SMEs either don’t know about them, or are too busy to apply for as many as they could.
There is a very helpful guide to available grants here.
As many SMEs excel in one area, but may struggle with the process of grant application once they have found suitable opportunities, the Small to Medium Enterprise Association (SMEA) of Australia has offered help to make this a lot easier.
For members of SMEA, there is a free service whereby grant consultant company Pattens Group will evaluate your entitlement and will provide you with a written report of potential grants. You can then appoint this group to lodge the application on your behalf, at which point you will only pay a fee if you are successful in receiving the funding.