The bank turned you down, huh? That’s a shame. But, all hope is not lost. Aspiring business owners who look to start their own companies often think that the bank is the only way. It certainly isn’t, and there’s a lot of potential alternatives out there for you.
But before we get to all that, you probably want to know why the bank turned you down. You don’t always get a cut-and-dry answer, and it’s only fair that you understand where you went wrong. Here are a few suggestions to try and shed some light.
Why The Bank Turned You Down
The first and most obvious reason why a bank might turn you down is due to your lack of credit. Each credit bureau will calculate your credit score a little differently, but you don’t always know which bureau the bank uses. It isn’t easy to raise your credit score in a very quick amount of time, so this poses a very big problem for many.
You might find that you were simply unprepared for the application process. You really need to go into it with a business plan, including details of all the important information you need. If you’re unprepared, you’re unlikely to come away with a good result.
It could also be that you lack collateral. Some banks are going to look to collateral as a way of making the deal less risky. If you’re a new business, and you haven’t got anything to offer, you could struggle.
Ultimately, it might just come down to the bank itself. They’ll have their own ideas about what’s risky and what isn’t, and you’ve unfortunately fallen into the former category
What Are Your Options?
A rejection from the bank isn’t a death sentence for your aspirations of business ownership. Here’s what you can do.
You might want to go to a business finance broker, who can offer alternative solutions like pension-led funding in some cases or short term lending. They’ll help you to analyse the situation and find the best way to get your business up and running.
Alternatively, crowdfunding has become a major source of business funding in recent years. Set up a profile on Kickstarter for example, and see how much public funding you can generate. Keep in mind that if you’re going to do this, you’ll need a seriously good idea!
And guess what? You might not even need all that much business funding in the first place. By re-evaluating your business plan, look to try and cut costs wherever possible. The more effort you put into this; the more likely you are to find ways of managing on low funds. After doing this, you might not be able to get a huge loan, but alternative methods might just help you to get on your feet.
That’s all we’re going to talk about today, but we hope you’ve found some inspiring tips to go away with. Ultimately, it’s always a shame when the bank turns you down, but there’s help at hand from many other sources. Good luck!