3 min read. December 23, 2021 – by Lauren Coppolone
If your small business loan request has been denied by a bank – don’t think you’re alone. Small business loan approval rates at big banks stand at a mere 13.6%, according to the latest figures.
Big banks impose rigid requirements that all too often exclude small businesses from financing. While interest rates have dropped since the onset of the pandemic and access to lending has improved – it’s still fairly difficult to get a business loan from a large bank.
Receiving an application denial can be very discouraging – but it doesn’t have to be a dead-end. There are many other ways to secure financing for your business that are more efficient – and faster – than traditional banks.
Start by understanding why your business loan application was denied in the first place. It’s always helpful to learn more about your business qualifications and in some cases, you may even discover inaccurate information on your credit report.
The most common reason businesses are denied financing is because they fail to meet one or more of the following bank lending requirements.
Banks aren’t your only sources of small business funding. In recent years, more lenders and resources have popped up. Here are some of your best alternatives to finding capital if banks reject your loan application.
SBA loans are some of the most sought-after business financing solutions. They feature extraordinary low-interest rates and fees – while also being generous on funding amounts and repayment terms.
SBA loans can also be used for a large range of business expenses – such as operational expenses, real estate purchases, equipment purchases, or even debt refinancing.
While SBA 7(a) loans are the most popular pick for small business funding – SBA 504 loans, SBA microloans, and others are also a solid choice.
To apply for SBA financing, you’ll need to work with a participating lender. Some of these may be banks, but many others can be different institutions – such as credit unions or online lenders.
While SBA loans come with many perks, they can also be difficult to qualify for. SBA loans oftentimes require good credit, strong revenue, and more. Depending on the reasons the bank rejected your application, you may struggle to qualify for SBA financing as well.
Online lenders are another popular source of small business funding because of flexible solutions, loosened requirements, and fast funding times.
If you’ve been rejected from a bank, online lenders may be your next best chance at securing funding. They tend to be more willing to work with businesses with shorter histories, lower credit scores, those that lack collateral, and so on.
Online lenders provide many of the same loan products offered by traditional banks – and sometimes an even more diverse range of solutions. Online lenders typically offer term loans, business lines of credit, equipment loans, invoice financing, merchant cash advances, and more.
Many businesses opt for online lenders when they need funding fast. Their application processes are known to be efficient, straightforward, and speedy – with funding times in as little as 24 hours.
The downside is that some online lenders can be expensive. It’s recommended you do your research and compare multiple offers before making a final decision.
Crowdfunding is a modern financing solution that is particularly popular among early-stage startups. It entails raising small amounts of capital from many investors to generate a larger pool. Investors typically receive stock or equity in exchange for funding the campaign.
While crowdfunding is typically fast and straightforward – it also comes with a few drawbacks. Most significantly, crowdfunding usually forces entrepreneurs to give away equity, which can create valuation problems or even threaten your control over your own business.
Small business grants can be a great source of financing, especially because they’re essentially cost-free. However, grants typically offer only small amounts of capital and can be hard to get.
Nevertheless, they are worth exploring.
There are numerous small business grant programs available through the federal government, local governments, and even some private companies. You may even qualify for additional grants if you’re a minority-business owner or veteran.
Some of the most popular grant programs include:
National Business Capital is an online business financing marketplace that helps all types of companies secure the funding they need. Whether you’ve been rejected from a bank or you’re looking for a more efficient, all-encompassing approach to lending – National has solutions.
Start by filling out the 60-second application and an expert Business Financing Advisor will contact you from there. You’ll be matched with numerous offers from over 75 different lenders – allowing you to compare and pick the best fit.
No matter what your qualifications are, National can help you get financing. There’s no minimum credit score requirement and business history requirements start at 6 months. Best of all – National works fast to get your funds deposited in hours.
Learn more about the financing options you could qualify for here.
National Business Capital helps entrepreneurs secure quick and fair financing to save time and cultivate sustainable growth.
Our stress-free online platform is designed for simplicity and speed, helping business owners go from application to approval in a matter of hours. And while we remain a leader in the Fintech industry, our clients agree it’s our personalized service and award-winning team that sets us apart.
From SBA loans to lines of credit, to equipment financing, and more, business owners can access all the different financing programs available to them in one place. Through our streamlined process, we have helped clients secure $2 billion in financing since 2007, and, more importantly, we’ve helped entrepreneurs save a tremendous amount of time and grow faster.
Lauren is the Marketing Manager at Nationalbusinesscapital.com. She has 7 years of professional experience with a focus on small business marketing and finance. She previously worked as a senior business analyst for B2B SaaS, Sky IT Group. She has covered topics including, business financing, startups, retail, taxes & regulations, etc. Her work has been featured by USA Today, Google & Yahoo News. Lauren holds a B.A. from the Fashion Institute of Technology’s (FIT) School of Business.