Securing Startup Financing When Banks Turn You Down
Don’t be embarrassed if a bank turned your loan application down; it happens all the time. Big banks are only interested in lending money to big corporations, so you’ll likely need to look elsewhere for your startup financing. The good news is there are plenty of options out there.
Keep Your Business Plan and Financials in Order
Most alternative lenders will want to see your business plan and financials just as the bank did, so make sure you have a fresh copy on hand. If your plan or financials were one of the reasons the bank rejected your loan, revisit the issue and address it, either by rewriting the area of your plan that didn’t work or providing a detailed explanation of any negative financial information.
Approach Those Within Your Circle
Ask any successful entrepreneur and many of them will tell you they opened their first business with the help of family and friends. In fact, many financial publications report that this is the most popular way to secure startup financing, so why not approach those close to you and see if they’re interested in helping you out. If so, give them the same courtesy you did the bank. Provide them with a copy of your business plan and come up with a mutual agreement on how you intend to pay the money back.
Grants work well because the money is yours to keep; you just need to qualify for it. Many local and state governments offer business grants, as does the federal government. If you have a specific niche in which you will be working, such as research or technology, you might also be able to secure a grant from a nonprofit or for-profit organization. Take the time to see if there are grants available for your specific startup financing needs, and then fill out the application and provide all requested documentation.
Seek Alternative Funding
Angel investors are established people willing to put their money into your business; liquid assets are anything you have that can quickly be converted into cash. This includes your retirement and savings accounts, your home’s mortgage against which you can borrow, or any line of credit or credit cards you may have. These, too, can fund your startup costs, and sometimes you must think outside of the box to get the money you need.
You and your business idea won’t get anywhere if you don’t have the money to open your doors, so don’t let the bank’s cruel rejection slow you down. Secure startup financing through one of these alternative methods and fund your dream today.