Business loans are notoriously tough to get, especially if you’ve just launched your business. The truth is that big banks also prefer to work with big clients or those with a potential for being big. They also tend to privilege certain industries and shun others altogether This is why so many applications get rejected every year.
However, that doesn’t mean that this is where the buck should stop, no pun intended. Thanks to technology and the sheer number of choices available today, small businesses have more bargaining power than ever. Here is what you can do if you can’t get a business loan from your bank.
Fix Your Finances First
The first thing you should do is make sure that your personal credit is in order. And to do this, you have to know how healthy it is.
The only way to do this is to get your credit report. All you have to do is contact the three major credit agencies, Experian, TransUnion, and Equifax, and order your free copy. You are entitled to one copy, free of charge, each year.
Next, check if you can spot any errors. These services will have a clear and easy to follow procedure. Errors could make a big difference to your credit score and cleaning them up could open you up to opportunities. Then start building your credit by doing things like applying for a secured credit card and making sure you make payments on time on all your existing accounts.
Consider Alternative Business Lenders
There are services out there that are dedicated solely to small and medium business lenders, and these will usually be much more lenient. Services like AdvancedPoint Capital, for instance, will consider other factors to gauge the health and profitability of your business. While credit score will be a factor, other indicators of your business’s financial health will be used to make their decision.
Look at Invoice Factoring
Invoice factoring is a system that allows you to get a loan based on your accounts receivables. In short, you get money from past due invoices immediately.
However, know that invoice factoring will usually require that your business has a certain history, and can also get costly. But it can be a great option if you’re experiencing short-term cash flow issues or need money for an emergency repair or replacement.
Peer to Peer Lending
Peer to peer lending is also an option that you could consider. But it’s not as easy as some will make it out to be. For one, know that many of these services will require that you have a certain credit score to be eligible. And even then, you may need to establish a history with them to get the best deals. However, fees are usually lower, and you can get to the money much faster than with most banking institutions.
As you can see, bank loans are far from being the only option. If you manage to turn your finances and business around and show that you have a good plan for the money, you should be able to find a great lender in no time.