You’ve been turned down for a bank loan – now what?

You’ve been turned down for a bank loan – now what?

Business Finance, News

Funding is a challenge for businesses of any size. Whether you are a one-man band, a small start-up or a growing business with 50+ members of staff, at some point you will need a cash injection to help ensure the future of your firm. And for most SME owners, the first place they turn to is the bank.

But according to recent research from Oxford Economics, bank lending to UK SMEs fell by three per cent between 2015 and 2018. Furthermore, SME loans amounted to just two per cent of the total lending provided by UK banks in 2018 (

This lack of funding can be blamed on a sluggish economy and risk-averse lending landscape, with banks preferring to focus on mortgages and loans to large businesses, rather than SME finance. But high street banks are not the only port of call for finance-seeking business owners.

If you have been turned down for a bank loan, there are plenty of alternative funding options that you can still consider – and they may even be better suited to your business’ needs.

Here are just a few of those options:

1. Peer to peer lending

P2P lenders such as Funding Circle and Assetz Finance offer competitively priced loans to small and growing businesses. These loans are funded by a network of investors. By simplifying the lender/borrower relationship, P2P platforms can afford to offer cheaper loans over a range of time periods.

2. Invoice finance

This is where business owners apply for an advance on an incoming invoice, to shore up any potential cash flow issues. This is usually a short-term solution which can prove invaluable to small business owners.

3. Crowdfunding

Similar to P2P loans, crowdfunded loans are funded by a group of individual investors, rather than one single entity. Investors will either ask for an equity stake in the business or a pre-agreed rate of interest in return for their money.

4. Credit cards

Arguably the most expensive option – credit card funding will usually come with an interest rate of 20 per cent or more. However, there are ways to use corporate credit cards to your advantage – for instance, by seeking out cards with a long interest-free period, and switching between deals where possible.

Turned down for a bank 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.

Image: student10 by PTICA10 licensed under Creative Commons 4.0

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