Small Business Finance FAQs

Repayments are deducted daily or weekly from merchant settlements via a ‘pass through’ account

• A pass-through account is a separate deposit account where daily electronic sales are directed
• An agreed withholding percentage is taken daily from the merchant’s electronic sales example 10%, then the balance of the funds 90% credited to the merchant’s business account
• There is no cost to open the ‘pass through’ account, and the settlement team manages this process for you

1. For Merchants with high credit card and EFTPOS sales typical value under $1,000
2. Owner of business and trading min of 6 months, provide banking and merchant statements to verify turnover
3. Minimum business turnover of $10,000 per month with 8 to 10 customer deposits spread
4. Merchant must show positive bank balance with minimal dishonours, overdrafts OK
5. Low credit score of 400 plus with paid defaults. Will not accept open bankruptcies, outstanding tax liens, recent foreclosures, collection accounts or open judgments
6. One year remaining on leased business premises, or confirmation of renewing, no sub-letting. Landlord references are required
7. If buildings owned need current mortgage statement and rates notice
8. Merchant cash advances over $75K we require two years signed financials

1. Electronic Funds Transfer at Point of Sale. EFTPOS simply means cash is not physically exchanged to settle the sale transaction
2. Rather payment is made electronically directly from customer’s bank account into the merchants  business account
3. EFTPOS funding is also referred to as Merchant Cash Advance

• You can access 50% to 100% of your monthly turnover.
• The final amount offered assessed on your business proven ability to repay the advance or loan
• Other assessment factors include credit score, term, industry and other current loans.

1. Merchant cash advances designed for short-term cash flow funding
2. Business must be operating as a retailer with high merchant transactions
3. Typically increases are calculated from 50% to 100% of your monthly turnover
4. The advance term is between 3 to 18 months which based on your daily sales and the negotiated percentage of payback set over that period
5. Payback adjusts with your revenue, the higher the daily sales, the faster the advance is repaid.

For various reasons, many SME’s fails to meet the banks lending requirements where security or full financials are unavailable. Banks also require high credit score as a risk indicator when lending money;

• Alternative funders will consider business trading for min 6-12 months where banks need three years financials and consistent trading history
• Alternative lending such as unsecured business finance and merchant cash advances and invoice financing is cash flow funding based on turnover providing a short-term solutions.
• Entrepreneurs seek private debt or equity from investors by assessing the overall business opportunity and global potential, including proof of concept or an established market needing capital for expansion or acquisition.

• The investor receives a regular income usually above deposit term and cash rates.
• Corporate or SME bonds are less risky than shares in a company, which ranks lower than equity shareholders.

1. All businesses are usually funded through debt or equity, with various instruments available between short-term, medium and long-term options.
2. Debt is an obligation from one party to make payments to another party, and there is always a cost to borrowing the money. There are two types of debt funding secured and unsecured.
3. Equity relates to ownership. The equity in a company sold via shares in return for investment capital.  This money is often known as ‘risk capital’ as there is no guarantee of return and no contractual liability to the existing business.
4. Equity capital used for establishing a startup business, expansion strategy or business development requirements. More information on our Capital Raising program for equity funding.

Offers that do not need disclosure. Section 708 of the Corporations Act describes a Small-scale offers with 20 investors in 12 months to a limit of $2 million

Potential investors are presented with hundred of opportunities each year. To ensure your business get a fare review and invited to present your offer, you need to investor ready before you commence on your capital raising journey. Seeking debt or equity investment is one of the hardest jobs of an entrepreneur. Some tips for a successful presentation and investment;

1. Investors are looking for a solid business, not an idea. You need have proof of concept, prototypes or foundation customers that proves the business model, if you have not already commenced trading and established your market share.
2. It is important that your management team has a proven track record or experience in the industry sector. If not, accumulate an advisory board with experience. Investors invest in people first and the business second.
3. Address the problem you are trying to solve. You may be disrupting a particular market or have discovered a new service or product that consumers need.
4. Know your target market. Customer segmentation with key marketing metrics will demonstrate you have thoroughly researched your potential market.
5.  Clearly define your implementation strategy and exactly ‘how’ you are going to make money.
6. Know your competitive landscape. Every product or service has competitors and being the first to market has benefits.
7. List your barriers to entry such as proprietary technology, intellectual property patented designs. If your onto the next big think, you will soon discover copy cats or your products or service in some form.
8. Have a clear and believable grasp on the financials both actual and projections forecasts. Touting a high valuation based on your prediction of a billion dollar company in the next few years will not get you any investment.
9.  Show you believe in your opportunity through financial commitment and your have ‘skin in the game’. Investors will back you if you back yourself.