How SMEs can gain better financial footing after 2 years

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Experience counts, especially if you are an SME that has just celebrated your 2nd Birthday and looking for finance.

SMEs have more finance options after 2 years

If you have recently founded a business, you probably know that it can be difficult for start-ups to obtain finance. By their nature, startups don't have many resources to their name - after all, a startup begins with just you and your idea. The goal is to build momentum slowly and eventually have a sustainable company.

Here's the good news - there's usually an inflection point after about two years. At this point, more funding options become available, and you can start to turn your business into something safe and sustainable, rather than a financial liability for yourself personally.

After two years, you can still think like a startup, but your business funding could be a little different.

Why it's tough in the beginning

There aren't a lot of finance options for a business that's just starting out. According to ZDNet, Australia has a particularly acute problem with startups finding the financial backing they need.

"There is money available from venture capital, but it is difficult to get and quite limited," entrepreneur George Slavov said. "So unless you are a student just starting out with an idea or a very small team which needs very little money and has very little expenses, it is quite difficult."

Generally entrepreneurs end up putting their family homes up as collateral, borrowing from family and friends or paying higher rates for unsecured loans.

Things change after those first 24 months

Eventually, though, it becomes possible for entrepreneurs to find business finance solutions that are less risky, at a lower cost. The cut-off point for this occurs somewhere around two years, when banks and non-bank financiers throw their hat in the ring, bidding for your business.

“Refinancing after 2 years may reap rewards for any business that still wants to be hip and cutting-edge like a startup but not be burdened with high cost of funding”, says David Wright, a Senior Relationship Manager at Classic Funding Group.

“We come across many companies that, through necessity, had obtained high interest, unsecured loans to kick off their business idea”, Wright continues. “Whilst Classic Funding Group unfortunately cannot assist businesses with finance at the start up stage, once they have been trading for two years, we have a number of options that could significantly reduce their cost of funds”.

Finance options after 2 years

Invoice finance can be a valuable asset because it gives companies quick access to working capital without having to worry about cash flow. This is a great way to reduce risk, increase financial autonomy and keep growing your business. Invoice finance, also known as debtor finance, is suitable for a wide range of businesses, including those who are looking to grow or simply trying to make it through a rough patch in a given week or month. “Actually, this form of cashflow finance may be an option for startups with less than 2 years of trading history, so long as they have a reasonable spread of business customers”, clarifies Wright.

Equipment finance is another valuable resource that can help businesses continue to develop and grow. Every business needs to invest in equipment that will support its day-to-day operations, and financing can make it easier to access this equipment whilst keeping the cash flow running smoothly. “After you’ve been in business for two years, Classic Funding Group may be able to assist you with a “Sale-back” of existing assets or finance of any new assets you require for your business”, explains Wright.

Whatever financial challenges you're trying to overcome, if you’ve been in business for 2 years or more, it is worthwhile to review your options. Contact David on 1300 780 895 to discuss your situation or

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