Ways to Secure Your Small Business Financing When the Bank says No
Getting money to finance your small business can be challenging most times. There are many aspiring entrepreneurs with awe-inspiring ideas that lack the capital to turn these ideas into a tangible business. This is because
Getting money to finance your small business can be challenging most times. There are many aspiring entrepreneurs with awe-inspiring ideas that lack the capital to turn these ideas into a tangible business. This is because they are often turned down for bank loans as banks loans are mostly for businesses with operating histories.
Even if your business is already operational, you may need to raise capital to expand. Or you may need it to survive tough times. But securing such funds can still be very tough most of the time.
Thankfully, there are many alternatives to secure a loan with requirements that are not as stringent as those of banks. Here are a few of these alternatives you can turn to when you get a no from the bank
1.You can raise funds with your assets
If you have a small business or a beautiful idea with profitable prospects but lack the required capital to implement, one of the ways to raise fund without the banks is to take inventory of your assets to uncover resources you did not know you had.
Assets such as equity in real estate, vehicles, personal belongings, your savings accounts, retirement accounts, etc. You may decide to sell some assets to raise the required capital when the bank loan option is not feasible.
2. You can raise money from your family and friends
Family and friends is one common way most start-ups finance their businesses. Funds from family and friends can be a grant to support your business or an interest free or lower interest loan. However, it is important to note that if it is a loan, it may jeopardize important personal relationships.
To avoid it, you should supply formal financial projections, as well as an evidence-based assessment of when you will repay their money and most importantly, you need to highlight the risk involved. This shows you take their money seriously.
3. Equity investment
Equity in business terms simply implies proprietorship (ownership). Equity investment is one easy way of financing your small business without the bank loan; this is when an investor makes money available in exchange for share of ownership of the business. Equity investment includes any money from individuals, including you, friends or relatives, business partners, or stockholders. These funds are not secured on any of your business assets.
4. Cash advance
Cash advance makes money easily available for your small business; though this is mostly applicable to operating businesses. Cash advances such as https://www.merchantmoney.co.uk/working-capital-loans/merchant-cash-advance/ is an alternative financing source that can provide you with a one-time lump sum of cash in exchange for a set percentage of your future sales. You can repay this advance daily by having a percentage of your credit and debit card sales deducted from your account until the amount is fully paid. Factoring is another cash advance you can consider depending on your business needs.