There are few things that can be as nerve-wracking as applying for business financing, especially when you’re a new business. The only thing that is worse, is getting rejected for a loan after going through the gruelling application process.
Traditional banks aren’t known to be particularly fond of small businesses, and unless you can show impressive numbers and potential for growth, getting financing through them will be an uphill battle. Luckily, there are tons of alternatives open to small business owners today, and if you play your cards right, you could find a way to secure financing without having to go through a bank. Here’s what you can do if you just got rejected for a bank business loan.
Look at Non-Bank Lenders
If you can’t get a loan through a bank, nothing is forcing you to work with them. There are tons of non-bank private lenders that would be more open to working with someone like you.
These lenders will often look at other things besides your business’s credit score or how long you’ve been in operation. They’re more likely to take things like assets and cash flow into consideration when assessing creditworthiness. If that’s something that would interest you, we suggest you check out firms like diversefundingsolutions.com.au that can connect you with hundreds of private and non-private non-bank lenders. This way, you won’t have to do the legwork and they’ll be able to connect you with a lender that is tailormade for you.
Consider Invoice Factoring
If you have cash flow issues and all you need is money to meet this month’s obligations, buy inventory, or replace/repair equipment, you should consider looking for invoice factoring. This would allow you to borrow against your accounts receivables and pay once your clients pay you. All you’ll have to do is pay a fee. And the best part is that it’s your clients’ credit that will be the main determining factor to be eligible for this type of financing. This makes invoice factoring a good option if you have less than stellar credit.
Improve Your Credit
Speaking of which, it’s never too late for you to improve your credit score. But to improve it, you have to know what it is in the first place. You can pay to get your credit report from credit reporting agencies like Equifax, but there are services like OnDeck that will allow small businesses to check their credit score for free.
Once you get your credit score, you have to take the steps necessary to either establish or improve it. Try to open accounts with suppliers and make sure that they report financial activity to bureaus. You could also get a small secured credit card and build your credit that way. A secured credit card is a card you will need to back with a deposit. This deposit will usually be the balance for the account and serve as collateral. The great thing with this is that if you stay in good standing, you could ask for the limit to be lifted and your card to be turned into a regular credit card.
As you can see, getting rejected by a bank doesn’t have to be the end of the world. Business owners have more choices now than ever, so take advantage of your power and look around.