What Are My Options After My Small Biz Loan Has Been Denied?

If you've been denied a personal loan for your small business, don't worry.

There are a number of alternate routes you can take when it comes to finding funding.

With financial assistance options in mind, here are a few ways you can fund your small business after your initial loan is denied:

Small Business Loan Denials in the U.S.

Thousands of small business and personal loans are denied each year in the United States and for various reasons.

According to a recent survey by Biz2Credit, a large majority of lending institutions turn down small business loan proposals on a regular basis.

Bank of America tops the loan denial list turning down 13.5% of small business loan applications every year. JP Morgan Chase isn't far behind denying 11.6% of its small business loan applications. Finally, Wells Fargo denies 11.2% of the small business and personal loan applications it receives each year.

The numbers above don't make these lending institutions an enemy of small businesses.

In fact, a loan denial is usually a result of the financial health of the business itself.

Reasons for a Loan Denial

As the following article looks at, before your business figures out what to do after being denied a personal loan or small business loan, it's important to first figure out where you went wrong. There are a number of reasons why your initial loan application was denied.

For starters, the loan denial could be a direct result of a poor credit score. Or, your business may not have enough collateral for the amount you were trying to borrow.

Likewise, the lending institution might consider your business a risk due to current economic factors relating to your industry.

Whatever the issue is, it's important to pinpoint and correct it. From there, you can branch out and find other lending options.

Other Lending Options

Just because your initial small business loan proposal was denied doesn't mean you should give up your pursuit for funding.

There are countless funding options available, some of which you've probably never thought of.

Among them:

• Private Lenders - Seeking out private lenders is your first go-to option after you've been denied a loan from a traditional lending institution. A private lender could be a family member, friend, or angel investor who provides a small amount of money for a small return on investment.

• Crowdfunding - Crowd sourced funding is new to the game, but it actually works. Sites like Kickstarter allow you to post your business plan and ask for contributions.

• Self-Funding - There are also numerous ways you can self-fund your small business. You can sell personal assets, dip into your savings account, get a home equity loan, or even go the zero interest credit card route. Although these options aren't ideal, you'll technically be the only investor, which has its benefits.

Try Again

If your small business or personal loan is denied the first time around, you can always try again.

Many traditional lenders take into account the current business climate, which fluctuates all the time. By waiting and applying for the same loan later, the lending conditions may be more favorable.

Don't let a loan denial stop you from starting your small business - there's always another option.

About the author

Adam Groff is a freelance writer and creator of content. He writes on a variety of topics including personal health and social media.

Comments

Post new comment

The content of this field is kept private and will not be shown publicly.
CAPTCHA
This question is for preventing automated spam submissions.