Right now, big banks are approving more small business loans than they ever have in US history. However, they are still turning away almost 75% of all applicants.
Only about 1 in 4 of small business owners who apply get good news. What are the rest to do? The banks may be the first option you think of when you’re looking for a loan or funding, but they are far from your only option.
If the banks have turned you down, or you know it’s not even worth your while to apply, here are 3 alternative ways to fund your small business.
A Merchant Cash Advance
You’re more likely to get a merchant cash advance (MCA) than you are to get a loan. An MCA is not a loan, it is a type of funding. This means it’s not subject to traditional loan standards or regulations.
You could receive up to $500,000 in funding, in exchange for a small percentage of your future transactions. You have a strong chance of getting approved if you have been in business for over 6 months and you have over $10,000 a month in transactions.
They are offered by companies such as Payvant Capital and could be the best option if you’re in need of quick funding. The application can be done completely online and you may be able to confirm your funding within 24 hours.
Crowdfunding
We have all heard the success stories about billion-dollar ideas that were built using crowdfunding sites like Indiegogo.
Can these sites result in an influx of cash beyond your wildest dreams? Yes. But it’s not as simple as putting up your video and hitting refresh every 15 minutes to watch thousands of dollars pour in.
If you’re going to try this, you need to prepare to invest a lot of time and money into marketing your campaign. In fact, you will leave whatever industry you’re in and be in the crowdfunding marketing business for a few months.
If you have a fun business idea that will make for a great video and get people excited, this could be a solid route to go. However, if you’ve built a new unsexy SaaS, it may be harder to generate buzz and raise any money. This is why only about a third of Kickstarter’s campaigns reach their goal.
Angel Investors
You can also get someone to invest in your company. This can give you an influx of capital and may add a seasoned advisor who can help grow your business. In fact, Harvard Business School reported that ventures backed by angel investors are more likely to succeed and grow.
The problem is that the money is far from free. You’re most often giving up a piece of your company. And if you’re not careful, you can end up giving up a lot more than you expected. You’re not simply signing away future money or a percentage of future profits. You could also be giving away decision-making power and giving a new party a dominant voice in how your business is run. This can cause friction down the line.
For more business solutions, visit this page and find everything you need for your business.
Of course, these are only 3 of your options when the bank says no. However, they are the 3 most popular options and one of them could be the right choice for your business.
Be sure to investigate all of your options thoroughly before committing!
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