Finance your business

Businesses sourcing finance for growth must take care to understand the liabilities and risks that accompany financial agreements.

You need to approach potential financiers with a detailed business plan and budget to support your funding requirements. Comparing the different options available will assist you to determine which one is best suited to your business needs.

Some funding examples include:


Self-funding is often the first step in seeking finance and involves funding purely through personal finances (savings) and revenue from the business. Investors and lenders will expect some amount of self-funding before they agree to offer you finance.

Funding from family and friends

Family or friends may offer to loan you money which will need to be repaid. Alternatively, you may offer them a partnership or shares in your business which may be easy way to get the finance you need. However, this option must be carefully considered to ensure your relationships are not negatively affected.

Loans from a bank or another type of financial institution

There are a variety of loans available to small businesses to suit various situations. They can vary in the amount, loan term (the time the loan needs to be repaid by), interest rate, interest rate type (i.e. fixed or variable), fees and security available from banks and financial institutions.

Angel investors

An angel investor provides financial support for small startups or entrepreneurs. They usually operate alone or in small groups. The capital they provide can be a one-time injection of seed money or ongoing support for the business. They may help with advice and contacts, in exchange for convertible debt or ownership equity.


Microloans are small business loans that are small amounts of money, usually being less than $35,000. Microloans are generally used for start-up capital funding. Microloans can be used for many purposes including the purchase of equipment, inventory, machinery, fixtures, furniture, supplies, and even to purchase another business. Typically, microloans are smaller loans granted to borrowers without any form of viable credit. They can be made between a pair of private parties, or can be granted by a microloan institution with funds made available by individual investors.


Financing your business through donations of money from the public is often done through crowdfunding websites. You will post your business idea as a ‘campaign idea’ onto the crowd funding website with a description of your project. If people want to support your campaign, they often purchase shares or product to help you achieve your goal.

To encourage support for your campaign, you can offer incentives and rewards based on the amount donated. These incentives and rewards can be things, such as merchandise, acknowledgement, or discounts on a future purchase of the product you are developing.

Peer-to-business lending

A peer-to-business lending platform links wholesale investors wishing to lend directly to small and medium sized enterprises (SMEs), through an online marketplace for loans.

Venture capital

Venture capital is a type of funding for a new or growing business and can be for a large amount of capital. It usually comes from a venture capital firm that specialise in building financial portfolios for their investors. The venture capital firm providing the funding usually seeks a percentage of the business in exchange for their financial input and business expertise. Venture capital can also include managerial and technical expertise.

Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies with high growth potential. The downside for entrepreneurs is that venture capitalists usually get a say in company decisions, in addition to a portion of the equity.


A grant is a financial award given by the federal, state or local government or another business and is not expected to be repaid. There is usually a lengthy application process to qualify for and be approved for the grant. Most recipients are required to provide reports on their grant project’s progress. Available grants can be found through the grant and assistance finder at Grants are usually designed for a specific purpose and may not align with your plan for your business.

Occasionally, there are scams involving people calling small businesses to offer grant assistance however there are some legitimate service providers that may assist you to find appropriate grants for a fee. You should consider researching the company that has called to ensure you are dealing with the appropriate company or government agency to avoid scams.

Questions to consider

  • What finance your business idea requires?
  • What can you contribute to the idea financially?
  • What is the most suitable form of funding for your business idea?

Download the Finance your business guide.

The NSW Government has a state-wide subsidised business advisory service, Business Connect. You can browse the network of Business Connect advisors by region, topic, location or industry and select one you think appropriate for your needs. Please register online to book an appointment with your chosen advisor who will be in contact with you within the next two business days. The first four hours of one-to-one business advice are free.