There are various ways to raise start-up capital for your business. Before you set out, you need to know how much capital is required, how it will be repaid and over what time frame.
Financing options include:
Using your own funds
Using your own funds is the best option, as cash is immediately available, there's no interest to pay and you don't have to offer anyone else equity in the business. But your needs may well be beyond your cash reserves. In this case, you'll need to turn to other avenues in order to get the necessary capital.
A bank loan
The bank you already use is a logical place to go to raise capital. There are many different types of loans which may suit your needs. Consider one or a combination of Westpac's award winning finance solutions to suit your business needs.
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Government grants
A good place to start is Government's Business Entry Point and GrantsLINK
Finance companies
These are geared more towards active investors and will generally loan money for more risky ventures compared with a bank. They also charge higher interest rates. Finance companies will be interested in your collateral, your track record and the potential of your new business.
Equity financing
Sometimes, raising start-up capital requires "giving up" a portion of your business to private investors. This is called equity financing and involves dividing your business ownership among investors who contribute capital, but who may or may not participate in the day-to-day business operations.
There are no loans associated with equity financing and there's no legal obligation on you to pay back the amount invested. All the investor gets for his/her money is a percentage of the business and the losses and profits associated with it. This may seem ideal, but remember you are giving up a portion of your business and with it some control. Negotiate the best possible package for yourself.
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