Grow and Innovate Your Small Business with Smart Borrowing

June 2023

Small businesses make up almost 98% of all Australian enterprises. Despite being prolific, small businesses often operate with limited resources, time and funding, meaning small business owners are often restricted from growing their offerings or taking innovative steps to expand.

Smart borrowing choices can transform small businesses by giving them the same opportunities available to larger enterprises.

Borrowing options for small business

Having a smart borrowing strategy is essential for small business owners looking to grow or change.

There are two primary ways to access additional financing – equity financing and debt financing.

  1. Equity financing
  2. Debt financing

The most common type of debt financing is a loan. There are several types of loans available for small businesses, each with specific terms, interest rates, and repayment structures.

Assessing your borrowing needs – and making the smart choice

Understanding what you’re borrowing for, and what your business wants to achieve, will help build out a strategy that will ensure you’re making the smart choice for success.

The first question to answer is: what do you want to achieve? Are you looking to add a service or product to your customer offering? Do you want to increase reach by taking on 10% more staff?

Being clear about your business goals will allow you to calculate how much money you need and the time any changes will take to impact revenue.

Once you know the dollar amount that you need to grow or innovate your business, you need to be certain you will be able to make any repayments. Questions to ask and answer may include:

  • Do you have a buffer in place if your plans take longer than predicted to start making a profit?
  • Are you able to safeguard your personal finances?
  • Will you be able to service the loan if the economy or your circumstances change?

Working through the best and worst-case scenarios will help identify potential risks and benefits of different types of loan.

How borrowing can help grow and improve your business

With the right planning and strategy, borrowing can be transformative for small businesses competing in an active market.

One independent survey of 210 Australian business owners estimates that despite the unstable economy, 2023 is being viewed as a growth year for small and medium-sized enterprise, with 50% looking to expand.

Choosing how to grow or change your business is the most important part of borrowing. From investing in marketing or online presence, increasing output with better technology and equipment, or putting some money behind your people-power, there are an almost endless array of options that could help take your business to the next level.

Developing a smart borrowing strategy will give your small business the opportunities it deserves to grow and change. If you need any help securing the best funding option for your unique business needs, please reach us on 1300 828 567.

The information in this post is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Geared Finance, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.