Top Funding Solutions for Australian Businesses Who Need Cash Fast
Updated: Mar 9
Australian Businesses in a Pinch: Top Funding Solutions for Immediate Cash Needs
Small businesses in Australia, like any other businesses around the world, are facing a wide range of challenges in today's fast-paced and ever-changing business environment. One of the most pressing issues that many businesses are facing is the need for immediate cash to keep their operations running smoothly. This need for quick cash can be caused by a variety of reasons such as unexpected expenses, slow-paying customers, or the effects of the current economic downturn.
These short-term financial obligations often affect operations from running smoothly so without access to immediate cash, businesses may struggle to pay their bills, employees, and other expenses, which can lead to financial distress and even insolvency.
Once a business gains access to immediate cash, it will become more flexible to take advantage of more opportunities, like buying inventory, expanding operations, or investing in equipment. This can help them grow and stay competitive in their industry. With the pandemic still affecting the global economy, businesses can weather the economic downturn as long as they have access to quick capital infusion on demand. More importantly, cash serves as a safety net for unexpected expenses or a sudden decrease in revenue.
The good news is that there are several funding solutions available for Australian businesses in a pinch to access immediate cash.
Looking for the right financing for your business? The most obvious first choice to get quick cash is business loans. After all, it is the most popular and widely used funding solution for Australian businesses.
Business loans are a type of funding that is provided by banks and other financial institutions to businesses for a variety of purposes such as working capital, expansion, or purchasing equipment. There are several types of business loans available to Australian businesses including secured loans, unsecured loans, and microloans.
If you’re asking whether you’re eligible for business loans or not, it would vary depending on the type of loan you’re looking for and the lender you’re dealing with. Australia’s top ten best business loan providers include Lend.com.au, Max Funding, Prospa, Capify, Shift, Lumi, OnDeck, Zip Business, Business Fuel, and Butn.
What are the pros and cons? Businesses can get large amounts of cash with the option to use the loan for a variety of purposes. However, it does come with strict eligibility criteria and may need to provide collateral.
Secured or unsecured? Businesses have the option to choose either of the two types of business loans.
Secured business loans require collateral, such as property, equipment, or inventory, which means the lender can seize the collateral to recoup losses in case the lender can’t repay the loan. These often have lower interest rates with more favourable terms as the lender is less risky. Some secured business loans include equipment financing, mortgage loans, and inventory financing.
Businesses with a higher level of risk may opt for unsecured business loans as collateral is not required. However, the business owner needs to have a good credit history and a solid business plan to demonstrate the capability of repaying the loan. It is important to know that the interest rates tend to be higher and less favourable than secured business loans.
Business Line of Credit
Another type of financing is a business line of credit (LOC) that works much like a credit card. When applying for it, the business is approved for a certain credit limit as long as it can make regular payments on the borrowed amount. It can also be secured, where the business has to put up some form of collateral.
Why apply for one? It gives greater flexible access to cash thereby allowing you to borrow as much or as little as you need and then pay it back once you're able to. This is particularly useful if your business doesn't have a regular cash flow or when you need to make unexpected purchases or investments. More importantly, it can also be used as a safety net for businesses weathering the storm in these uncertain economic conditions.
Merchant Cash Advance
Another interesting type of funding that Australian businesses can access is merchant cash advances (MCA). It allows business owners to sell a percentage of their future credit card sales to a lender. The lender gives a lump sum of cash to the business for a period of 6 to 12 months. It gives time for the business to repay the advance (including the fee) from a percentage of the daily credit card sales.
It can be utilised in several ways:
a. Quick access to cash for businesses that need to cover unexpected expenses, such as repairs or equipment breakdowns.
b. Provide funds needed for businesses to take advantage of new opportunities, such as expanding their operations, purchasing new inventory, or investing in new equipment.
c. Manage seasonal fluctuations in cash flow by providing a steady stream of cash during slow months.
d. Improve cash flow by providing a lump sum of cash upfront, which can then be used to pay bills and salaries or invest in growth.
However, merchant cash advance is a far more expensive form of business financing than traditional business loans as it typically charges high fees and interest rates. Before considering this option, it is important to ask for professional advice from other leading online lenders. Take time to carefully evaluate the terms, fees, and interest rates.
Equipment and Asset Finance
Sometimes, Australian businesses need to acquire new equipment and purchase other assets to keep them going so getting these financed is crucial. This type of funding allows them to pay for it over time rather than upfront thereby giving them the flexibility to focus on other aspects of growing the business. It's a cost-effective way of acquiring equipment and assets without holding them back.
So how can they utilise this type of funding?
a. Acquire new equipment such as machinery, vehicle, or technology without having to pay the full cost upfront thereby conserving cash flow and gaining full access to equipment to grow the business.
b. Upgrade existing equipment to improve efficiency and productivity.
There are other equipment and asset finance options available, like leasing, hire purchase, and chattel mortgage. Each one has its pros and cons so it is important for business owners to carefully evaluate the terms, fees, and interest rates offered by different finance providers and compare them with what's widely available in the market before making that decision.
Also known as factoring or accounts receivable financing, invoice finance is a type of funding that allows businesses to access cash by selling their unpaid invoices to a third party.
So how does it work for Australian businesses?
a. Improve cash flow by providing immediate access to cash from unpaid invoices thereby helping businesses pay bills, salaries, and other expenses to avoid financial distress.
b. Manage seasonal cash flow fluctuations during slow months.
c. Provide funding for expansion of operations, purchase of new inventory, or investment in new equipment.
d. Cash on demand to cover unexpected repairs or equipment breakdowns.
Typically, invoice finance has a service fee, which is a percentage of the invoice value. Sometimes, the providers offer a flat fee. It is important to evaluate different options from providers by comparing the terms and conditions.
In conclusion, small businesses in Australia are facing a pressing need for immediate cash to keep their operations running smoothly as a result of unexpected expenses, slow-paying clients, or the effects of the current economic downturn. Without access to immediate cash, businesses may struggle to pay their bills, employees, and other expenses, which can lead to financial distress and even insolvency.
Fortunately, there are several funding solutions available for Australian businesses to access immediate cash. Each of these funding solutions has its own set of advantages and disadvantages, and business owners should find one that suits their needs and requirements.
In doing so, they can ensure that they have access to the cash they need without making it difficult for them to settle their financial obligations in the long run. In the end, it's all about increasing chances of success in today's fast-paced and ever-changing business environment.
Want to get your business funded fast? Funding Link is committed to providing small to large businesses with flexible and fast funding solutions. Find out what your options are. Apply here now!