Business Daily Media

Why You Don’t Need the Banks to Help Finance Your Business

  • Written by Jamie Cunningham


As the Royal Commission leads to an increase in lending standards and requirements for banks, many businesses will be forced to look outside the Big Four to raise the capital they need.

 

The good news is that there are a lot of untapped capital options for SMEs to look at.

 

The Royal Commission has meant that bankers are keeping a much closer eye on who qualifies for a business loan.

 

But this might be a good thing – people tend to regard the banks as the safest option for a business loan, but in my experience that’s not always the case – the banks can actually be riskier than the alternatives.

 

For example, there’s so much compliance that the banks need to meet, and if you don’t meet those ongoing requirements, you can lose your loan. For small businesses, the requirements for collateral and the standards you need to meet in the first place can be much higher.

 

They also have the least emotional investment in your business.

 

So let’s look at some of the other options to secure the finance you need.

 

Organic Growth & Efficiency

 

Choosing this option forces you to think differently and run a much leaner organisation. By focusing on efficiency and developing higher-than-average profitability, you can create the cash needs for growth internally. This approach also serves to future proof your business because you won’t owe anyone any money.

 

Angel Investors/Private Money

 

Angel investors speak the language of business far better than most banks do, but most small businesses have never even heard of the concept of angel investing. Angel investors can often have a soft spot for entrepreneurs because they know how valuable someone like that would have been when they were starting out.

 

Angels are generally more involved and more flexible when it comes to the success of the business. There are different angel networks out there that can be an excellent source of capital for your small business.

 

The three Fs – Friends, Family and Fools

 

Sourcing money and investments from your existing networks and private investors is always an option, but it carries with it the same risks as lending money in everyday life – you want to make sure it won’t affect your personal relationships.

 

Customer Pre-payments

 

If it suits your business, you can look at changing your payment structure so customers are paying in advance, allowing you to raise the capital that will allow you to grow and accommodate more customers in the future.

 

Second-and-third-tier lenders

 

While some second-tier lenders might have a slightly higher interest rate, many offer lower interest rates than the banks themselves. They also have a higher risk profile which means they’ll be more invested in the success of your business, and similar to angel investors, more flexible.

 

Of course, the banks remain an option if you’re looking to secure finance, but the important thing to remember is they aren’t the be-all and end-all. It’s important to think outside the square and consider all your options when you’re looking to establish or grow your company.

 

About Jamie Cunningham

 

Jamie Cunningham is an international speaker and business coach who has dedicated his career to making businesses better. Mr Cunningham built his business acumen working in the family printing business in Australia, where as Chief Operating Officer, he managed a multi-million-dollar business and led a team of 35 people. Knowing the time was right to move onto a new venture, he put a succession plan in place to extract himself from the family business and move with his Canadian wife to Canada where he still maintains a division of SalesUp, as well as several successful real estate ventures.

Now back down under, Jamie works with select clients who are ready to play at a higher level. He is currently writing a book that will be a blueprint for success in small business, covering human resources, finance, time and management.

Business Today

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual workspace more comfortable. Employees are ...

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’s sovereign capabilities toward in-space...

Deliver business benefits through operational excellence

As Australian businesses emerge from the pandemic lockdowns and draw up plans for growth, increasing numbers are adopting a strategy of operational excellence. Operational excellence involves everyone in an organisation and f...

Modern slavery conference to take on the criminal enterprises and address global injustices

Influential experts from around the world will take part in a unique international online summit targeting modern slavery being hosted by Australian charity Freedom for Humanity later this month. Modern slavery is a process...

Unit4 Appoints Tania Garrett as Chief People Officer

 Unit4, a leader in enterprise cloud applications for people-centric organisations, today announced the appointment of Tania Garrett as Chief People Officer. Tania will oversee the company’s people success function wh...

FIVE reasons why you should set up an instant office instead of a fixed lease

Australia is now on the cusp of very volatile economic period. As the world tries to pick up the pieces after two years of global lockdowns and constant setbacks, we continue to face the aftermath of COVID on many levels. Acc...

Business Daily Media Business Development

Utilising communication tech to alleviate employee burn out

Hybrid work solidified into the business model in 2021 – plain and simple. Jabra research revealed 42 per cent of employees last year requested leadership to help make their virtual wo...

David Piggott, Managing Director ANZ at Jabra - avatar David Piggott, Managing Director ANZ at Jabra

Space Machines readies for liftoff securing launch services deal with SpaceX

SpaceX to carry Space Machines' Optimus Orbital Transfer Vehicle as part of its April 2023 mission. Optimus is one of the largest spacecraft built in Australia and furthers Australia’...

Business Daily Media - avatar Business Daily Media

India's employee hostels are often like prisons – but young women garment workers don't always see it that way

Kavitha, 18, earns a living at a clothing factory in the southern Indian state of Tamil Nadu. Like many of her colleagues, she lives in accommodation provided by the factory, where she share...

Andrew Crane, Professor of Business and Society, University of Bath - avatar Andrew Crane, Professor of Business and Society, University of Bath

Shortage of workers threatens UK recovery – here’s why and what to do about it

For the first time since records began, there are more job vacancies in the UK than unemployed people, according to the latest monthly labour market figures. This has been driven mainly by a...

Donald Houston, Professor of Economic Geography, University of Portsmouth - avatar Donald Houston, Professor of Economic Geography, University of Portsmouth

A central bank digital euro could save the eurozone – here's how

Blockchain bailout?4K_HeavenThe European Central Bank and its counterparts in the UK, US, China and India are exploring a new form of state-backed money built on similar online ledger techno...

Guido Cozzi, Professor of Macroeconomics, University of St.Gallen - avatar Guido Cozzi, Professor of Macroeconomics, University of St.Gallen

Deliver business benefits through operational excellence

As Australian businesses emerge from the pandemic lockdowns and draw up plans for growth, increasing numbers are adopting a strategy of operational excellence. Operational excellence in...

Chris Ellis, Director Pre-Sales at Nintex - avatar Chris Ellis, Director Pre-Sales at Nintex



NewsServices.com

Content & Technology Connecting Global Audiences

More Information - Less Opinion