Business Finance Selection Tool
In Australia a remarkable variety of types or source of business finance is available. This article sets out a short list in a neat table format.
The table includes finance types such as venture capital, shares, equipment leasing, initial public offerings (IPOs), hire purchase, overdrafts and customer pre-payments.
The table is a tool for business planning, business re-structuring, charting a growth strategy and working out the role of collaborators in financing a business (be they family members, staff, shareholders, venture capitalists, bankers, suppliers, customers and even the Government).
| Finance Type | Debt / Equity* | Development Stage | |||||||
| Start-up | Development | Growth | Maturity | Decline | |||||
|
Sweat equity |
E |
• |
• |
|
|
|
|||
|
Superannuation fund |
E |
|
• |
• |
• |
|
|||
|
Cash flow / profits |
E |
|
• |
• |
|
|
|||
|
Angel finance / family |
D / E |
• |
• |
|
|
|
|||
|
Corporate investment |
D / E |
|
• |
• |
• |
|
|||
|
Venture capital |
D / E |
• |
• |
• |
• |
|
|||
|
Private equity / hedge |
D / E |
|
• |
• |
|
|
|||
|
Government support |
D / E |
• |
• |
• |
• |
|
|||
|
Customers |
D / E |
|
|
• |
• |
|
|||
|
Finance company |
D |
|
|
• |
• |
|
|||
|
Bank |
D |
|
|
• |
• |
|
|||
|
Suppliers |
D |
|
|
• |
• |
|
|||
|
Leasing company |
D |
|
|
• |
• |
|
|||
|
Initial public offering |
E |
|
|
• |
• |
|
|||
EQUITY |
Ordinary |
Long |
• |
• |
• |
• |
|
||
|---|---|---|---|---|---|---|---|---|---|
Preference shares |
Long |
• |
• |
• |
• |
|
|||
Redeemable shares |
Long / short |
• |
• |
• |
|
|
|||
Options |
Short |
• |
• |
• |
• |
|
|||
Convertible notes |
Long |
• |
• |
• |
• |
|
|||
DEDT
|
Loans |
Med. / long |
• |
• |
• |
• |
|
||
Leasing |
Med. |
|
|
• |
• |
|
|||
Hire purchase |
Med. |
|
• |
• |
|
|
|||
Overdraft |
Short |
• |
• |
|
|
|
|||
Bills |
Med. / long |
|
|
• |
• |
|
|||
Mortgage |
Long |
|
|
• |
• |
|
|||
Debenture |
Med. / long |
• |
• |
|
|
|
|||
Subordinated Debt |
Short / long |
• |
• |
• |
• |
|
|||
Convertible note |
Short / long |
|
• |
• |
• |
|
|||
Bond |
Long / short |
|
|
• |
• |
|
|||
OTHER |
Factoring |
Short-Med. |
|
|
• |
• |
|
||
Guarantee |
Med.-short |
• |
• |
• |
• |
|
|||
Suppliers supply on consignment / customers prepay |
Short |
• | • | • | • | • | |||
* NOTE: The characterisation of each type of finance in the second column of the table reflects generally accepted views on whether it is debt or equity finance. However, tax law may treat each item differently as regards whether under tax law it is debt or equity finance.
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