Financial Assistance Options for Small Businesses
Are you the owner of a small business? Do you have an exciting product or service that you need help launching? Or do you want to renovate or upgrade your business, but don’t have the funds to do so?
What many businesses don’t realize is that, in Australia’s start-up culture, there’s always someone to lend a helping hand. Small business owners can help realize their business goals by applying for widely available grants or loans. Within Australia, there are many government and council initiatives that provide financial support for small businesses and start-up initiatives. Alternatively, loans can also be granted by commercial banks. We highly recommend that all small business owners look into what opportunities are available to them.
City of Melbourne Small Business Grants
This is a program that offers grants and financial assistance to eligible Melbournian small businesses that have innovative, market-ready products or services. Grants up to $30,000 are available to start-up companies, existing businesses that are aspiring to expand or develop more products. Companies looking to export their products to overseas markets are able to access up to $10,000 worth of funds.
Here are the requirements needed to be eligible for these helpful grants:
- Business is or will be located within the City of Melbourne municipality
- Australian Business Number (ABN)
- 20 or fewer full-time employees
- The proposed product or service must be market-ready
Applications for grants will be opened in March 2020. In the meantime, check out the City of Melbourne’s Business Funding Guidelines for further information.
Australian Government Grants and Assistance Programs
The Australian Government provides a website where businesses can search for grants. Business owners can find programs that are the most suited to their business needs by entering their postcode, profession, industry and the areas they are looking for support in, such as advertising or purchasing upgrade equipment.
Small Business Loans
The Australian Government suggests that business owners should consider the following factors before applying for a loan:
- How much do you need to borrow?
- What is the purpose of the loan?
- Can the business afford to punctually repay the loan, interest and any other additional fees?
- What security can you offer the lender, and how will this affect the interest rate offered?
- Are you currently in a tax debt? Being in a payment arrangement with the ATO may decrease your chances of receiving a business loan from a bank.
Understanding these factors will help you in determining what kind of loan is the most suitable for your business, your choice of variable or fixed interest rate and whether you want your loan to be secured or unsecured.
Strengthening Business Loan Applications
To widen your eligibility for loans, and increase the likelihood of receiving them, Westpac has provided some essential tips:
- Ensure your financials are accurate and updated so that you understand whether you can afford the business loan
- If you already have a business loan, don’t overdraw your account and try to make additional repayments whenever possible
- Pay your debts on time in order to sustain a good credit history. In our last article,How Credit Scores Can Affect Your Business, we affirmed that having a high credit score will enhance your financial reputation and increase your borrowing potential.
How Much Can You Borrow?
When applying for a business loan, it is likely that you will need to provide an asset as collateral. This is typically in the form of property. Doing so will help you secure the loan — the more you provide for security, the lower the interest rate will be. Westpac will loan business owners up to 80% of a residential property’s value, 65% of a commercial property’s value and 70% of a rural property value.
Taking advantage of government grants and bank loans are a great way to boost your business productivity and performance. Just make sure that your business is well-equipped to handle the requirements of holding a loan and is able to make repayments on time to make the most of the loan benefits.