Published on June 4th, 2014 | by Pete2
Denied a business loan? Help is at hand
When the financial crash happened in 2008, one of its enduring legacies led to difficulties in securing bank loans. Getting finance to help start your business or to help with expansion plans can often be a barrier which prevents individuals and businesses from ever realising their full potential.
More often than not, business owners with solid proposals get refused as banks do not want to fund any loan that carries an unwarranted risk. They much prefer to invest in established businesses with two or more years trading behind them and are cash flow positive.
This can be very frustrating for the aspiring entrepreneur, not to mention detrimental to the wider economy as many sound business ideas are never given the chance to get off the ground. So where does the small business go to get business loans for when the bank says no? Luckily there are options still open and with a little tenacity it is still possible to get things off the ground. Here are a few options for obtaining the start-up capital you need.
Alternative lenders are non-bank lending institutions that will often lend to business owners that can’t get (or choose not to get) a loan through a more traditional bank or credit union. These institutions are more likely to give you a good hearing and some advice on how to take your ideas forward.
Getting a loan with a government guarantee can be difficult. Like traditional bank loans, the process can take a long time and requires a lot of paperwork. However with banks still taking a very conservative approach to lending you might find government backed agencies more willing to listen, particularly if your idea is solid and you sell it with enthusiasm.
Loans from family and friends.
Many people advise that you shouldn’t mix business and pleasure and that there should be no crossover between your personal and your professional life. However if your close circle are a good source of funding then there’s no reason why this arrangement shouldn’t work. After all who wants to see you succeed more than your nearest and dearest? It is important if you are going down this route to draw up a proper contract with repayment terms.
Releasing equity on your home is one of the quickest and easiest ways to obtain cash. In recent times banks have put in place stricter guidelines before they will give you a loan against your home as a precaution against what happened during the crash.