Securing finance with the bank can be extremely difficult. Banks do lend, but they can be overly cautious when it comes to small business loans. In today’s uncertain climate it often isn’t enough to make a visit to the bank manager with a solid business plan and a good credit rating. Banks want to see a good track record, proof that your business is making money. If you’re just starting out, it can be challenging to demonstrate the profitability of your venture. So what should you do if you’re turned down for a small business loan.
What’s next?
The bank turning you down doesn’t mean the end of your dreams for your business. There are plenty of other options out there to help you secure the finance that you need to make your aspirations a reality. It all starts with the bank but under the Small Business Enterprise and Employment Act 2015, the bank has to refer you to another lender. Known as the Bank Referral Scheme, banks are obliged to pass your loan request details over to other providers in an attempt to help you secure alternative finance.
Any downsides?
There are many other finance providers out there who are ready and willing to take a chance on someone with a good credit rating and a secure business plan. You will pay more for it, through higher interest rates but, so long as you can afford it, it might be worth it to realise your dreams. Interest rates will be based on your risk, so ensure your business plan is as solid as possible to obtain the cheapest loan available.
Are there other alternatives?
If you are looking for a loan to purchase some new equipment, you could consider leasing. There is a wide range of equipment that could be obtained through a lease agreement. You could acquire anything from IT equipment to office furniture or even a vehicle to be used for carrying out your business. You could even secure a lease for manufacturing equipment or other big ticket items that will really make a difference to your business. Leasing can be an incredibly effective way to move your business forward without having to worry about securing credit. There are many other benefits of equipment leasing too; there are tax advantages, you can upgrade equipment easily when circumstances allow and you can spread the cost of the VAT. Maybe leasing equipment might be the better choice for your business.
Bank turns you down for a small business loan – where to find out more
There are many other alternatives to a bank loan if you’re looking for finance for your business. You could look at alternative finance options that will help you grow your business from strength to strength. We can help, take a look at our business finance section to find out more. Or get in touch if you’d like to discuss how we can help. We have access to alternative finance providers and can help with short-term business loan to help you achieve your business expansion goals.
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