A guest article written by Kim Teschemacher
So your request for a bank loan was denied, you may wonder “what’s life like after a business bank loan denial?” Yes, it can be heart wrenching to see the big red “rejected” stamp across your application for a loan, but it is important to realize that the loan process does not end there.
To move forward, you must understand how often banks tend to refuse loans to small businesses, why they deny small businesses, and to discover alternative options that could actually work better for your business.
Currently about 60% of small businesses will be denied a bank loan when applying and about 95% of small business under $5 million in sales will not apply to a bank for a loan. This statistic alone proves that bank loan rejection is not uncommon, and it absolutely does not mean that you run a faulty business – more often than not, banks are reluctant to provide money to small businesses because they see them as a huge risk. Banks favor bigger businesses because they embody a secure financial relationship with minimal risk because larger businesses, and their owners, have assets.
Banks want to see a high personal credit score, ability to repay the loan plus accrued interest, as well as at least one source of collateral. Said simply – banks just aren’t lending out much money anymore unless you can back it up with collateral. Since this denial is so common, do not shrug your shoulders and just give up – instead you should continue moving forward and researching other ways to receive the financial support you need.
It’s a simple concept – small businesses need access to working capital to maintain the business. But how can they obtain this money without a business bank loan? A recent trend for small businesses is to rely on alternative lenders to supply them money instead. These alternative lenders are more flexible than banks, and are much more likely to approve small business loans rather than banks. It’s like the saying “when one door closes, another door opens.” And this new door of alternative lenders can actually end up saving you money and increasing your company’s revenue.
Alternative lenders such as Payroll Financing Solutions provide small businesses with immediate loans and very little paperwork. Business loans ranging from $5,000-$100,000 to good small businesses with sales of $500,000-$7 million can be used for working capital or to make payroll. Instead of waiting around to be approved, you can get a same day decision. Funds will be available in your account in as little as 24 hours with about a 90% approval rate.
The flexible nature of most alternative lenders allows you to pay back the loan in as little as seven days without penalty, or over the course of six months. The qualities of alternative lenders allow small businesses to become financially independent again or to build your business where a business bank loan can be considered again.
So just because you were rejected for a business bank loan does not mean that your road ends there. There are a variety of alternate routes you can take to obtain the money you need to remain a profitable and successful business. Leave the tedious bank loans to big businesses, and let alternative lenders take care of the smaller ones.