Getting financial support for your business will depend on your circumstances. Whilst some may have their own savings to support them, others may have benefited from generational wealth to provide a starting platform. Generally, most start-ups or business ventures will need financial support through business loans, borrowing a large sum to enable them to begin their vision. However, it is not a guarantee that your application will be approved, so what happens next? Here are 5 steps you can make when the bank says no.
- Look at your Credit Report
There are numerous reasons why you may be declined by a lender, but one of the best ways to check is by checking your credit report. Ideally, you would have already checked this before deciding to apply for any loan, but if not, it will show you your credit score and factors as to why it may be low. With business loans in particular, it could be that your business plan was not convincing enough for the lender to take the risk. However, if your credit rating is really poor, this will also not provide confidence repayments will be maintained.
- Reduce Personal Debt
It can be easy to build up debt over time, especially if you have been using borrowing through loans and credit cards to maintain a particular lifestyle. The problem with this is that if you want to start a business, any personal debt will inhibit how much you can afford and invest yourself as you will still need to repay financial commitments on time. If you have a lack of available credit, you may still require payday loans UK lenders to help, especially to cover an unexpected or emergency expense. This can happen at any time, so ensuring you have reduced your existing debt as much as possible to increase your disposable income will ensure you can apply and afford repayments in the short term.
- Alternative Revenue Streams
If getting a business loan has been difficult, you may want to explore other options to receive a cash injection. Not all types of borrowing will be ideal for this, but there are options such as business credit cards that could be viable. If you do choose to apply for a credit card, you’ll need to weigh up the interest costs of doing so compared to a personal loan. As interest is charged monthly on credit cards, compared to a personal loan that charges the total interest at the beginning, you will want to ensure you do not pay too much interest and course unnecessary financial difficulty.
- Government Grants
There are government grants available for potential business owners, helping provide financial support at the start of your business venture. Not all grants are the same and many come with specific requirements to be eligible. The biggest advantage of successfully applying for a grant is that unlike a loan, you won’t need to pay it back. Due to this, you may have additional requirements such as investing your own money up to a certain amount to show your commitment to your business idea. Do your research and find suitable business grants that could provide the cash you are looking for.
- Crowdfunding
Extremely popular and able to be setup in minutes, crowdfunding is the modern way to raise funds and find investors. The difference is, you can reach out to a wider audience and decide how much someone will get in return thanking them for their donation. You can set limits and thresholds, so only those investing a certain amount will get shares in your company, for example. It can be as simplistic or detailed as you want it to be and there are plenty of sites this can be down through.
However you approach funding for your business, being declined for a business loan doesn’t have to be the end. Seek out other options for funding such as those above, and help your business get the start it needs.