When the banks turn you down for a loan, it can be difficult to shake off the rejection and get up and find another that will accept you. With hours and hours of time spent scouring the internet, it can be a challenging feat to compare business loans that are available to you and so here, we are going to look at five alternative business loans for when banks turn you down.
- Bridging Loans
Bridging loans are designed to help your business get the money that it needs for property developments or other short-term projects as quickly as possible. This loan is normally a short-term loan that is either unsecured or secured against a business or property and can be used in the short term to lay the foundation of your business. It can often be paid off as in instalments over a set short period, which is beneficial as it allows you to pay the loan back as quickly as possible after borrowing it, rather than having to stick to a payment plan for the long-term.
- Commercial Mortgage
A commercial mortgage is specifically set in place to help you fund the purchase of a space. For your business, this would most commonly be used for an office space and would help you to place down a deposit or to invest in another property, whether as another office or as a third-party business. With fixed rates, you can be sure that you will not be charged any extra through the course of your loan, ensuring you retain control over your finances even with a long-term commitment.
- Invoice Financing
Invoice financing is a simple way to fund your company – this loan type simply allows businesses to finance from any accounts receivable to improve the capital of the company. This can be used as a way to achieve a higher credit score and slowly fund the business without the need for external loans from the bank. Although this is something that may take time to implement and run effectively, it has the potential to start your business without running at a loss.
- Working Capital Loans
Unlike other loans, a working capital loan is only to be used short-term and not to invest in long-term investments. With smaller companies that rely heavily on clients work in order to pay workers, this loan can be used to pay employees within the company rather than reducing their hourly pay, and even just provide a cash injection throughout slower months. This loan is typically paid back within a few months in a similar manner to a credit card and is only used in times of need when the business is at a slump and work is less frequent.
- Unsecured Business Loans
An unsecured business loan is an ideal choice for a smaller business as they come from an independent lender. This is important as they are not tied to any of your business assets and therefore eradicate the risk of losing anything your business owns and opens up a funding option if you don’t have the assets to spare. This is great for those that are just starting out as it allows them to borrow the amount of money that they need without the risk of losing the business or their personal assets.
With all this in mind, it is important to remember that there are other alternatives for you and your business should you be rejected by banks. Where will you start first?