Rejected for a Bank Loan? Try These 6 Financing Options Instead
Traditional bank loans are not your only option.
- August 11, 2020
- 4 min read
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Are you an entrepreneur with the next million-dollar idea? Well, starting your own business is one of the most rewarding things a person can do. After you write up your business plan and do all your research, it is time to get funding for your startup. Sometimes this isn’t easy. Bank loans can be hard to get for startups because you don’t have the experience, financial reports and other requirements to be approved. So, if you have been rejected for a bank loan, maybe it is time you look into your other startup funding options.
Finding an angel investor is one financing option for those who are trying to start their first business. So, what are angel investors and is this the right option for you? An angel investors are wealthy individuals who are willing to invest in startups with their own money. They often provide entrepreneurs will thousands of dollars to help them get their business started. Angel investors often take a percentage of the company in exchange for their money. One positive thing about angel investors would be they can provide you with a large amount of cash quickly. The downside would be that you would likely be giving up full ownership of your company. You can get a lot of help from angel investors because they want your business to succeed as much as you do. I mean, they have invested their money it, so of course they are going to want to see those profits rolling in!
Crowdfunding is another popular source for funding startups and small businesses. Crowdfunding is basically raising money online to fund their startup companies. You basically set up a crowdfunding page and people start to donate small amounts of money in your business. These donations can be $10 or $100. These small amounts quickly add up and provide entrepreneurs with the money needed to start their businesses. The positive side to crowdfunding would be access to cash on hand and the ability to gain a decent customer base. One drawback would be that you really need to provide a great backstory to get the attention and attract enough donations. If you are unsuccessful, and don’t reach your cash goal, the people that have donated will end up disappointed when they never see the products they were promised. You could end up wasting a lot of time waiting for donations.
If your bank loan application has been rejected, maybe you should consider applying for a business credit card instead. Business credit cards will provide you with money to open your startup. It may be easier to get approved for a credit card, rather than a bank loan. Business credit cards may not have the limit you need to get started, but it could be worth looking into. Some business credit cards even come with spending rewards and cash back options. Credit cards can sometimes have high interest rates, so that would be one downfall. On the positive side, you would only be spending what you need and not taking out a large loan all at once. The business credit card may be less of a financial risk.
An unsecured business line of credit is another financing source for startups and small businesses. This line of credit is like a credit card. You are given an amount of money that you could spend, but you only take out the money as needed, and you end up paying interest only on what you use. Seek Capital can provide you will an unsecured line of credit and help you get your business started! You can use this type of financing to grow your small business or to maintain your working capital. Whatever your business needs, this type of funding can help you with your business needs!
Unlike traditional bank loans, startup business loans are made for those who are opening up their business for the first time. These loans are made specifically for entrepreneurs with little to no business experience. Startup business loans have easier requirements for approval and can be anywhere from $5,000 to $500,000. You can also get approved for a startup business loan in just minutes. It can be so easy! You will just need a solid business plan and a business idea that just can’t be passed up!
Lastly, you can apply for startup business grants. Grants will likely not provide you with the amount you need to start your business, but something is better than nothing, right? There are federal grants that can be given to entrepreneurs like yourself. Unfortunately, this financing option is likely given to non-profits, education institutions, and state and local governments. There are many tight requirements, so this may not be a viable option for your startup business.
Related: Small Business Grants for Women
So, if you were rejected for a bank loan, don’t give up just yet. Your business is worth the challenge of getting funded. You can decide what funding options are right for you and your business. These 6 alternative funding options all have their perks and downsides. They all have different approval requirements as well. Each of these funding options are worth looking into. Don’t give up — your startup will get the funding it needs, and you will be another entrepreneur with a success story!
More From Seek
- What Is Alternative Lending?
- Line of Credit vs. Credit Card
- 5 Smart Ways to Stay on Top of Loan Payments
Business Loan Resources
Photo Credit: Bojan Milinkov/Shutterstock.com
Best Startup Loans of 2020 - Get Between $5,000 and $500,000
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