How To Get Funding For Your Australian Business: Legal Options

Starting or growing a business in Australia is exciting - but funding can feel like the biggest hurdle. Whether you’re launching a startup, scaling a small business or buying an existing company, the right funding strategy (and legal setup) will save you time, reduce risk and make you more attractive to lenders and investors.

If you’ve ever wondered “where do I start?” or “what legal steps do I need to take?”, you’re in the right place. In this guide, we’ll walk through common funding options in Australia, how to prepare, the key legal documents you’ll likely need, and the rules to be aware of so you can raise money confidently and compliantly.

Our goal is to help you focus on building your vision - while we keep you on solid legal footing.

What Are My Options To Fund A Business In Australia?

There’s no single “best” way to raise money - it depends on your goals, stage and risk tolerance. Here are the main options Australian founders typically consider:

• Personal savings: Straightforward and fast. You retain full control, but you also take on all the risk.
• Family and friends: Common for early-stage ventures. Treat it professionally with clear written terms to avoid misunderstandings later.
• Bank loans and commercial finance: Useful for equipment, inventory or acquisitions. Expect to provide a business plan, financials and possibly security.
• Government grants and programs: Federal and state initiatives support innovation, R&D, exports and regional growth. Eligibility criteria are strict and timeframes can be long.
• Angel investors and venture capital: Equity funding in exchange for shares. You gain capital (and often expertise), but you’ll share ownership and decision-making.
• Crowdfunding: Equity or rewards-based campaigns raise funds from the public via regulated platforms. You’ll need to follow specific disclosure and marketing rules.
• Strategic partnerships or joint ventures: Collaborate with a partner who brings funding, distribution or expertise - formalised in a contract.
• Acquisition finance: If you’re buying an existing business, funding can come from lenders, investors, vendor finance or a mix of sources.

Each path has different legal implications. Before you sign anything, map out what you’re trying to achieve, the control you’re comfortable giving up, and how you’ll protect yourself if things don’t go to plan.

How Do I Prepare My Business For Funding?

Preparation is the single biggest factor in successful fundraising. Whether you’re speaking to a bank, an investor or a potential co-founder, expect to be asked for a clear plan and clean legal setup.

1) Build A Practical Business Plan

It doesn’t have to be flashy - but it does need to be credible. Cover:

• Your product or service and who it’s for
• Market size, competitors and your point of difference
• Go-to-market strategy and pricing
• How much funding you need, what it will be used for and key milestones
• 12–24 month financial forecasts and cash flow assumptions
• Your current and planned business structure

A clear plan helps you stay focused and gives lenders and investors confidence that you’ve thought through the risks.

2) Choose A Structure That Fits Your Funding Goals

Your business structure affects liability, tax, credibility and how you can raise money:

• Sole trader: Simple and low cost. You control everything, but you’re personally responsible for business debts.
• Partnership: Two or more people share control and responsibility. Partners are generally personally liable unless you operate through a company.
• Company (Pty Ltd): A separate legal entity with limited liability, which is often preferred by investors and lenders. There are setup and ongoing compliance requirements. Many founders set up a company early using a streamlined Company Set Up package.
• Trusts or other entities: Sometimes used for tax or investment reasons. Get tailored legal and accounting advice before you proceed.

There’s no one right answer here - it depends on your plans. If outside investment is likely, a company structure is usually the most flexible.

3) Register The Essentials (Without Overpromising What They Do)

• ABN: An Australian Business Number is generally needed to issue tax invoices and interact with suppliers and government. It’s not a licence to operate on its own, but in practice most trading businesses will apply for one.
• Business name: Register a business name if you trade under a name other than your own or your company’s. Registration doesn’t give you exclusive rights - only a registered trade mark does - but it’s required for trading under that name.
• ASIC details (if a company): Keep your company records up to date, including directors, shareholders and your constitution or replaceable rules.

A tidy, compliant setup makes you easier to fund - and reduces delays when someone is ready to say yes.

4) Organise Your Key Contracts And Policies

Before you approach funders, it helps to have the basics in place. At a minimum, think about:

• Customer terms: Written terms for selling goods or services (online or offline) clarify pricing, delivery, warranties, IP and liability.
• Supplier agreements: Lock down pricing, quality standards, delivery timeframes and termination rights with your key suppliers.
• Employment/contractor agreements: Clear terms with staff and contractors reduce HR risk and demonstrate professional operations.
• Privacy and data: If you collect personal information, have an appropriate Privacy Policy and data handling practices in place.

Having these documents ready shows you run a well-managed business - a major plus for any lender or investor.

What Funding Path Should I Choose (And What Are The Legal Steps)?

Government Grants And Programs

Grants can be highly competitive but worth considering if you’re innovating, exporting or creating jobs. Each grant has specific eligibility, application evidence and reporting obligations. If successful, read the funding agreement carefully - there are often conditions around how funds are used, milestones, publicity and audits.

Bank Loans And Commercial Finance

Lenders will assess your ability to repay. Expect to provide a business plan, financials, forecasts and possibly security (like a personal guarantee or business assets). Make sure you understand the terms around interest, covenants, defaults and enforcement. When borrowing from family or private lenders, a clear Loan Agreement sets expectations and helps protect relationships.

Tip: If you grant security over assets, the lender may register it on the Personal Property Securities Register (PPSR). That’s standard practice - just be sure you understand what assets are covered and the consequences of any default.

Angels, Venture Capital And Equity Rounds

Equity funding trades shares for capital. If you go down this route, you’ll typically need a Cap Table, a valuation approach and a clear set of investor documents. Two common documents are:

• Shareholders Agreement: Sets out decision-making, founder and investor rights, vesting, dispute resolution and what happens if someone leaves. A well-drafted Shareholders Agreement is essential if there’s more than one owner.
• Share Subscription Agreement: Records the terms on which new shares are issued for cash (including price, warranties and completion mechanics). Investors often expect a formal Share Subscription Agreement.

For early-stage startups, a SAFE Note (Simple Agreement for Future Equity) can be a practical option - you receive funds now, with shares issued later on trigger events (e.g. a priced round). It’s faster than a full equity round, but you still need to understand dilution, valuation caps and investor rights.

Crowdfunding (Equity Or Rewards-Based)

In Australia, equity crowdfunding must be run through a licensed intermediary and within the Corporations Act rules (including offer limits and disclosure). You don’t “register with ASIC as a CSF company” - instead, you work with a licensed platform and comply with the relevant eligibility and disclosure requirements.

Rewards crowdfunding (e.g. pre-selling products) is generally simpler, but your advertising still needs to be accurate under the Australian Consumer Law and your customer terms should be clear about timelines, refunds and risks.

Family And Friends (Or Other Private Loans)

It’s common to raise early funds from people you know. Treat it like a business deal:

• Be clear if it’s a loan (with or without interest) or an equity investment
• Document repayment triggers and what happens if timelines change
• Clarify whether they’ll have any decision-making role

Written agreements protect everyone and make future rounds smoother.

What Laws And Compliance Issues Should I Be Across?

Funding is a milestone, but it’s also when legal obligations come into focus. Here are the key areas to keep on your radar from day one.

Fundraising And Securities Rules

Australian law limits how you can offer shares to the public without disclosure. As a general guide:

• Small-scale personal offers fall under specific exemptions. If you raise beyond these thresholds, you’ll usually need formal disclosure.
• Equity crowdfunding has its own regime and must go through a licensed intermediary with prescribed offer documents and caps.
• Be cautious about public advertising for investments - statements can trigger disclosure obligations or mislead if not carefully drafted.

If you’re unsure how the rules apply to your raise, get advice before launching a campaign or publishing offer materials.

Contracts And Documentation

Good documents are your first line of defence. Alongside your investor or loan paperwork, consider customer terms, supplier agreements, employment contracts, NDAs and IP assignments. This shows you manage risk and helps avoid disputes that can derail a funding round.

Consumer Law (ACL)

If you sell goods or services, the Australian Consumer Law applies. That covers advertising, unfair contract terms, pricing transparency and consumer guarantees. Make sure your marketing and your customer terms are consistent and accurate - funders will notice if they’re not.

Privacy And Data Protection

If you collect personal information (for example, through your website, mailing list or investor interest form), put a compliant Privacy Policy in place and make sure your actual practices match it. Privacy issues are a red flag for sophisticated investors.

Employment And Workplace Rules

Hiring staff triggers obligations under the Fair Work system, including correct minimum pay, leave, award coverage, superannuation and safety. Use clear employment or contractor agreements and keep good records - it’s both a legal requirement and a signalling factor for funders.

Tax And Registrations

Register for GST if your turnover is expected to exceed the threshold, lodge BAS/IAS on time, and set up bookkeeping from day one. Equity raises, options and loan structures can have tax consequences, so factor in advice early. The information in this article is general in nature - always get independent tax advice for your specific situation.

Intellectual Property (IP)

Your brand, software, designs and content are often your most valuable assets. Consider trade mark registration for your name and logo, and ensure you own the IP created by staff and contractors via written agreements. Investors will ask who owns what - be ready.

What About Raising Funds To Buy An Existing Business?

Buying an existing business can be a faster path to revenue, but it comes with its own legal checklist - especially if you’re raising finance for the purchase.

Due Diligence

Before you commit, review the business’ contracts, leases, assets, IP, employees, compliance and any disputes or liabilities. This process is known as due diligence and it helps you price the deal properly and avoid surprises after completion.

Sale Documentation

The terms of the deal sit in the sale contract, so negotiate carefully. A tailored Business Sale Agreement will set out exactly what you’re buying (assets or shares), the price and adjustments, seller warranties, restraints and what happens if something goes wrong before completion.

Consents And Transitions

Some rights don’t automatically transfer. You may need landlord consent to assign a lease, novations of key supplier/customer contracts, licence transfers, or lender consents. Build these into your timeline so your funding and settlement dates align.

Funding Mix

Acquisitions are often funded with a mix of bank debt, private loans, equity and sometimes vendor finance. Document each element properly, align repayment timelines with cash flow and check for any conflicts between your finance documents and the sale contract.

What Legal Documents Will I Likely Need?

Every business is different, but many successful raises rely on a core set of documents. Consider which of these apply to you:

• Loan Agreement: Sets out interest, security, repayment and default terms - essential for bank, private or family loans. Use a formal Loan Agreement even for friendly loans.
• Shareholders Agreement: Governs ownership, decision-making, founder roles, vesting and exits when there’s more than one owner or investor. A clear Shareholders Agreement prevents disputes.
• Share Subscription Agreement: Records the terms of issuing new shares for investment, including warranties and completion mechanics. Many rounds use a standard Share Subscription Agreement.
• SAFE Note: A Simple Agreement for Future Equity used for early-stage funding to defer valuation while setting key terms. A well-drafted SAFE Note helps both sides align.
• Customer Terms (or Terms of Trade): Clarity on pricing, delivery, returns, warranties and liability helps you scale sales and reduce disputes.
• Privacy Policy: If you collect personal information from customers or prospective investors online, a compliant Privacy Policy is essential.
• Employment/Contractor Agreements: Clear roles, confidentiality and IP ownership terms protect your business as your team grows.
• IP Assignment/NDA: Ensure you own what’s created for the business and protect confidential information during discussions.
• Business Sale Agreement (if acquiring): If your goal is to buy a business, a tailored Business Sale Agreement and proper due diligence will be critical.

You won’t necessarily need every document listed, but you’ll almost certainly need several. Getting them right up front will make your funding round faster and safer.

Key Takeaways

• There are many ways to fund a business in Australia - from loans and grants to equity, crowdfunding and partnerships - and each has different legal implications.
• Invest time in preparation: a credible plan, an appropriate structure and clean contracts make you far more attractive to lenders and investors.
• If you raise equity, expect to use documents like a Shareholders Agreement, Share Subscription Agreement or a SAFE; for debt, a clear Loan Agreement is essential.
• Be mindful of fundraising rules, consumer law, privacy, employment obligations and IP - compliance builds trust and reduces risk.
• Buying an existing business adds steps like due diligence, consents and a robust sale contract - plan your funding and legal timelines together.
• Tax outcomes can vary with different funding structures; get independent tax advice alongside your legal setup to avoid surprises later.

If you would like a consultation on legally protecting your business when getting funding, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.