What To Do When The Bank Says No

Spending time writing the perfect business plan can really drain a budding entrepreneur. The amount of time and effort that goes into a detailed business plan can sometimes be overwhelming to manage, and if you are gearing yourself up to approach the bank, you’re likely feeling nervous. At the end of the longest application you have ever written, it can be extremely disheartening to be told no by the very place you had hoped would offer you a piece of security for your new business. Nearly all business owners who get told no by the bank almost always give up on their dream. So, all that time spent perfecting the business plan, the financial forecast and the loan application was all for nothing.
There are other options out there and before you put down the idea you’ve nurtured for so long, you need to look into them and see whether or not these options are feasible for you. Borrowing money from the parent bank, going through personal credit cards for no credit and trying again with the bank at a later date are all options that people go for when they choose to push forward. Sadly, not all of these options are as secure as that bank loan that you were turned down for.
When the banks started saying no to small businesses, alternative finance companies started to spring up to offer an alternative. The good news about these is that small businesses could still get their company off the ground in the way that they wanted to, meaning that the banks were then losing out on interest. In the last ten years, banks have relaxed their rules and started saying yes again, but it’s still few and far between for a business loan application to be approved. There are alternative business loans that are an option, and you don’t have to have security open and ready. Merchant cash advances, for example, work on the basis that they secure the loan against card terminal sales and you repay it in a percentage of the revenue that you benefit from in the future. This is a great option for recently turned-down retail businesses and it’s something that you can read more about here.
Other areas of business finance innovation include invoice finance, where people bid to buy your invoices from you. It may seem really odd that your bank would reject your bid for a small business loan, especially when you have put in all the legwork for a perfect business plan. If your banks computer tells you no, you need to find out why and rectify the situation for future applications. You cannot be defeated by the word ‘no’, if you aren’t willing to get to the bottom of the problem and make it work. Banks have very specific lending criteria, so before you approach them for a meeting about your hopeful loan, you need to ensure that you meet that criteria as closely as possible. If they still tell you no, then business angels could be what you need. Don’t give up!