When you’re starting a business from the ground up, money is usually always essential. It’s difficult to get things started if you cannot cover the cost of setting up an online presence, opening an office if needed, and paying employees or freelancers to work for you. The amount of funding that you will need will depend on a number of factors from the type of business industry you’re getting into to the products and services you plan to offer. Some businesses will need more cash from the start to fund vital equipment, for example. But, getting a bank loan for a brand new business is often difficult, if not impossible. Banks like to see good financial records, which right now are non-existent because your business is at the very first stage. So, what options do you have?
Small Business Lenders:
New businesses are often deemed by the banks to be those with the most high risk lending profile. Since there are no credentials to speak of and there are no past financial records for the bank to use, the lender doesn’t have anything to go by when determining whether or not a business should be accepted for a loan. If you have been rejected for a bank loan for your business or simply know that it’s not worth applying, you might want to try alternative small business lenders. These companies lend to new and otherwise high-risk small businesses who may not be able to get a traditional bank loan.
Business Credit Cards:
If you don’t need a huge amount of funding to get your company started, for example, you need cash to cover the cost of buying a piece of equipment so that you can start selling products or providing a service, a business credit card might be an ideal option. Brand-new small businesses are more likely to be accepted for a business credit card than a loan since the credit limit is usually lower. And, a business credit card allows you to only spend it on what you need for your business at any time.
Angel investors are an ideal option for new businesses with a lot of growth potential. If you know that you have a fantastic business idea that is likely to make a lot of money in the future but the only thing holding you back is being rejected for a bank loan, this is where an angel investor can step in. These individuals and companies are often past or current business owners themselves and are looking for new and upcoming brands to back and invest their money in. And along with the financial injection, angel investors will usually be added to the board of directors of your company, so that you can benefit from their expertise and input as well.
Getting funding for a brand new business isn’t always easy, no matter how much potential your business idea might have. Thankfully, a bank loan isn’t your only option; if you’ve been rejected at the bank, these alternatives might help.