According to Ernst & Young’s G20 Entrepreneurship Barometer, Australia is one of the leading countries in the world for entrepreneurship due to its education and training, tax and regulation, entrepreneurship culture, co-ordinated support between public, private and voluntary sectors and its ample access to a range of different funding options. These options include everything from self-funding, crowd-funding and contra-service swapping to seed and angel investing, bank loans and venture capital. (You can read Jo Burston’s guide to alternative funding strategies here.) But in addition to the more general funding types, there are a few more options available specific to Australia.
The Australian Federal Government invests nearly $3.5bn annually in grants and assistance programmes, most of which are targeted towards entrepreneurs and SMEs and can provide between 50% and 80% of the necessary funds to start a business, introduce new products or increase competitiveness. The programmes include the Entrepreneurs’ Infrastructure Programme, Small Business, Manufacturing, Regional Development, Innovation, Import and Export Assistance and Collaboration, and also feature funds specifically for Industry Skills and Growth amongst other topics. The Federal Government website has a helpful by-category breakdown of their programmes. For expanding companies, there are also regional-specific grants and grants for apprenticeships, flexible work arrangements, tourism and Commercialising Emerging Technologies (COMET).
Government grants can be beneficial to young companies, as they allow a lot of autonomy and can be one-time, renewable, conditionally repayable or as a part of an equity financing scheme. Typically, you won’t have to repay the grant or accumulate interest on it, guarantee specific financial returns on investments made or relinquish any control, ownership or equity when receiving the grant, although it is normal for recipients to be required to adhere to formal reporting requirements and complete audits.
The Federal Government offers a series of tax incentives such as tax reimbursements and credits, payroll rebates and the R&D Tax Concession, which enables companies to deduct up to 125% of expenditure incurred on R&D activities from assessable income, and for small businesses claim a cash rebate for the expenditure incurred. There are also different business incentives, such as government insurance against business risks, relocation incentives and access to resources, support and information available.
Bank help for budding businesses
Outside of Government help, several of the larger Australian banks will provide low- or zero-interest loans on an unsecured basis and at competitive rates to businesses starting out. They are often directed towards specific demographics such as young or female entrepreneurs, certain industries or geographical locations.
Crowd-funding platforms have also been credited by entrepreneurs as an irreplaceable resource, and in addition to international platforms Australia has its own range of crowdfunding sites including Pozible, VentureCrowd, IndieGoGo and Crowdfundit. As with any investor, however, there are both risks and rewards to crowdfunding which should be considered before jumping on board.
Ultimately, each new business and each entrepreneur will have preferences, obligations and clientele which will dictate which funding source will work best for them. Choosing where your funding comes from is a crucial decision in defining your business and its purpose, and there is no substitute for doing the research and finding the solution which fits your individual situation.