What to Do When the Banks Say No to Your Business Loan

So you’ve got an idea for a business and you are ready to make your dreams a reality. Now, the only thing that stands between you and your dreams is a boatload of startup capital. If you are denied at the bank, where do you turn? What are the other options for business owners looking for startup capital?

We’ve put together a few ideas to help you see that you don’t have to close up shop before you even get started. Some quick thinking, calling in some favors, and betting on yourself is all that is needed to find the capital you need.

Fund it yourself.

This is the advice that many aspiring entrepreneurs don’t want to hear: you can fund your business yourself. That means that you decide to go ahead even if the bank denies your loan. If you have some equity in your home or a car to sell, you can find some quick startup capital without the hassle of having to borrow money on the non-existent credit from your business.

Start lean.

Is there another way to start your business without a great deal of startup capital? Do you really need to have three programmers and a human resources representative on day one? Can’t you run the company on your own for a while, doing the bare minimum to get it started, and then add on where and when you really need it? This will save you a lot of money in the beginning and allow you to start your business for very little money.

Tap into your investments.

Instead of asking others to invest in your business, why not invest in it yourself? Tap into your retirement plan. If you believe your business is going to be successful, but the banks don’t, show them who’s boss and double down on your own ideas with money you’ve spent your entire life-savings. If you are willing to put cash on the table, others might be as well.

Barter your way to a business.

Rather than rely on capital to get things done in the beginning, offer your services or products in exchange for other services and products that could help you get your business off the ground. While goods and services don’t pay the bills, in the beginning, it’s about creating a buzz about your company so that you can get capital in short order. Give things away to get things in return. Eventually, you’ll be trading your product or services for real dollars, but only if you do whatever it takes to get started in the first place. Negotiate your way to what you need if the banks won’t fund you.

Borrow money from friends.

But treat it like a real loan. Offer them interest payments or scheduled repayments so that everyone is on the same page. Don’t expect them to just hand over the money. Offer them shares or stakes in your company after a certain point and get a lawyer involved if you need to. If your idea is as hot as you think it is, you’ll have no trouble selling it to people who are looking to help you succeed.

The banks get to decide who they do business with.

The banks, unfortunately, don’t care about you and your dreams and only want to invest in business plans that make financial sense for them. That doesn’t mean you have a bad idea. It just means you have an idea that your bank doesn’t support. But not everyone is your customer and if you believe in your product, you’ll find a way to make it happen with or without the bank loan. Don’t get down on the banks for saying no. They are not in the business of funding every business plan that walks itself through the door. Keep your chin up and your eyes peeled for ways to get the money you need and you’ll be on your way in no time.