The bank isn't your only source of finance. One of the following resources may work better for you and your business.


Crowdfunding involves asking members of the public to contribute money towards a one-off project. Sometimes it's a donation, other times it's in exchange for a good, service or equity. For example, an entrepreneur might launch a campaign for a new product where contributions of a certain amount will receive the product if the campaign is successful.

In most cases, money is raised through fundraising websites, such as Pozible or Equitise. In platforms such as Pozible, contributors only pay the amount they've pledged if the campaign reaches its target.

Crowdfunding is a great option if you've already got strong networks and want to build loyalty before you start.

Visit Pozible for an overview of what crowdfunding is and how it works.

Crowd-sourced funding

Crowd-sourced funding (CSF) is different from the donation or reward-based crowdfunding. In CSF, eligible start-ups and small and medium-sized businesses can raise money from the public to start or grow their business or pay of debts. People who contribute money can invest up to $10,000 in exchange for shares in the business.

Eligible companies can raise up to $5 million per year using CSF, as long as they:

  • are a new and existing Australian public company seeking funding by issuing ordinary shares
  • don't have listings on a stock exchange such as Australian Stock Exchange (ASX) or Chi‑X
  • have less than $25 million in assets and annual revenue

CSF was introduced to Australia on 29 September 2017 and is regulated by the Australian Securities and Investment Commission (ASIC).

Our page on crowdfunding and crowd-sourced funding explains some of the tax and legal implications, as well as the need to budget before you start:


Bootstrapping is where a small business finances its operations itself without borrowing large amounts of cash. It suits very small businesses that initially can't attract venture capital because of their size. The business might attract capital from larger investors once it has grown and positioned itself.

The nature of bootstrapping means businesses can become operational very quickly – for example, one person operating out of a spare room or garage. For this reason, it suits those that want to hit the ground running and take quick advantage of market opportunities.

A bootstrapped business is characterised by:

  • growth through immediate earnings
  • minimal overheads (for example, operating from home)
  • use of credit cards and reliance on advances from customers
  • use of networks – the product or service works well through direct sales and contacts
  • leasing rather than buying equipment
  • multi-skilling (for example, the CEO is also the cleaner)

Business angels

'Business angels' invest in new or expanding businesses. They're usually involved in the business, either directly or as a mentor.

When they invest, they take on part of the risk of growing a new business.

Business angels:

  • can be individuals or businesses keen to operate in the area of risk capital
  • make investment decisions fairly quickly
  • provide development capital
  • contribute their business skills and contacts to benefit a new business

How to find a business angel

Business Angels and the Angel Investment Network (AIN) have investor registers where private investors and businesses can find each other. For a fee, the needs of the business are matched with the private investor's criteria.

AIN Learn has a series of short courses for businesses on the steps involved in gaining funding, mistakes to avoid and best practice guidelines. This site also has other helpful information and templates to support small business fundraising efforts.

Venture capital

Venture capital is high-risk investment in new or young businesses that are seen to have the potential for rapid growth and high rates of return.

Venture capitalists provide capital for:

  • research and development of a business idea
  • early stage businesses
  • later stage expansion
  • management buyouts
  • buy-ins of established businesses

Unlike crowd-sourced funding, venture capital usually comes from investors with access to large amounts of money. Because of the high risk involved, venture capitalists will also invest skills and time and often require a large share of your business.

Family loans

Asking family members for a loan can result in flexible payment arrangements and fast financing. But there's a danger of harming family relationships if things go wrong.

No matter who the agreement is with, set things up in the most business-like manner possible. Put your agreement in writing and get professional advice before you complete the transaction.

Invoice financing

Invoice financing is where a business sells their outstanding invoices to an investor, who will then seek payment for the invoice. This allows the business to improve its cash flow by getting money for customer invoices immediately, instead of waiting for payment.

You can find investors to buy your invoices through an invoice finance platform such as Timelio.

Invoice finance is different to a loan or overdraft in that it's the sale of an asset – the asset being your customer invoice and your entitlement to this payment.

Selling a share of your business

Shares or equities represent part-ownership in a business. If the business trades profitably, the shareholder will get payments in cash, called dividends.

For example, you may wish to finance the expansion of your business by selling 25% of your existing business to an investor. If your business was valued at $1 million, selling 25% would provide you with $250,000 of capital to fund your expansion. But the investor would be entitled to 25% of your profit.

Shares enable the established business to raise capital. This can be done privately or by listing the company publicly on the stock exchange and inviting financial participation.

An ASX public share float is suitable for large, established companies that can manage the cost of setting up a successful float and listing the company. Whereas the National Stock Exchange of Australia lists small and medium-sized businesses and might be more appropriate for a small business wanting to raise capital.

Choosing the right type of financing

SBS Small Business Secrets' How to Get Funding for Your Small Business has more advice on:

  • getting funding from friends and family
  • crowdfunding
  • angel investors

The Small Business Finance website can help you understand what type of finance best suits your needs. The website is developed by the Australian Banking Association and CPA Australia and has information to help you understand the types of finance available so you can decide if debt finance is right for you.