Do you want to start a business in Australia but not sure where to get your start-up capital from? There are several options to consider, but which one is best for your situation?
SBS Indonesian asked David Sutantyo, finance broker and Managing Director of Twelve Grains Capital in Sydney, regarding this matter.
Here is a snippet of the interview.
What is the definition of small and medium-sized business in Australia?
Mr Sutantyo: "What is categorised as a small business in Australia is a business with a total turnover of less than $50 million per year, and has assets of less than $25 million, and has a staff of less than 100 people. Funding for a small business itself can come from anywhere, it can be done anywhere." from the director's own personal savings. Now this can be introduced in the form of equity or loans to the business."
How do I fund a business? Is it from the owner's savings? How much can be used?
Mr Sutantyo: "This may be different for everyone. But to be safe, don't exceed 30% of our savings. Don't forget the start of doing business, we still need to support ourselves AND the business itself must also be sustainable as long as at least 3 months, because profits don't always come from the first day of business."
What are the best options for funding a business?
Mr Sutantyo: "If you have a strong vision but don't have enough funds of your own to start a business, there is always the option of partnering with other people with the same vision or taking installments from the bank. Each option has its pros and cons. have a business partner, we share the risk, but we also share the profits, and of course everything must be mutually agreed. By taking installments from a finance lender, often the funds will be given to us and we will be responsible for the use and payment, indeed this is more expensive because there is interest in installments, but at the same time, the profits obtained will not be divided, and we have full control over the funds lent."
What things do lenders consider before granting a loan?
Mr Sutantyo: "For business loans, it depends on the lender. Business loans are riskier, because sometimes lenders can't take collateral like a house or a car. What we really want to see is more about the character of the borrower himself - what's his experience in this business, is there a history of borrowing? before, and whether the payment was on time.
Of course, all lenders will choose to lend money to borrowers who have been in business for at least 2 years, have a track record, have their own property, because if the business fails, the lender can take the property as collateral.
But we also know that the people who need loans are mostly people who are still pioneering. Usually, if it's like this, we just need to understand what the future plans are, how the cash flow projection is, how the operator's previous experience is. The higher the risk, the higher the interest on the loan."
What if I already have debts with other financial institutions for my other business/investments?
Mr Sutantyo: "No problem, this is even better. So lenders can also see how our payment history is with other lenders, if the payments are on time, of course lenders will be more comfortable in providing loans. The important thing is that the borrower can show that they are able to pay the instalments on time and will not harm their own business."
For the full interview, listen to the SBS Indonesian's podcast.
