What To Do If You’ve Been Turned Down For A Bank Loan

Before the recession hit the global economy, being turned down for a bank loan might have seemed like the end of a road for a business. Liquid cash was easily available, and a loan refusal indicated either complete economic non-viability, or serious credit problems. Now, however, more businesses are experiencing difficulty in accessing traditional sources of lending, despite perfectly good financial health.

With banks continuing to refuse to lend, non-traditional sources of finance have begun to gain more prominence. Before you turn to them, however, it is important to understand why exactly your application has been turned down. Not all banks will provide reasons, but it is always worth asking. In any event, the reason may be obvious to any financial professional, and some professional advice may enable you to adjust your finances in order to be able to succeed in a renewed loan application. At the very least, you will know what you need to improve to open up traditional credit in the future.

For the moment, however, you may still need an injection of money to smooth out your cashflow or to be able to afford to make a significant investment. Here, there are a number of different options which do not rely on banks. These include direct investment, asset finance and invoice finance.

Direct investment can come in many varieties. The most obvious takes the form of your own personal savings. Whilst few are fortunate enough to have savings substantial enough to make a serious impact on a company’s bottom line, an investment in the future of the business can be crucial in persuading others that you are serious. Such a commitment of your own personal savings can leverage extra funding if you approach a ‘business angel’ with a sound strategic plan for growth. These wealthy and successful individuals are often less concerned with credit history or short-term financial health, and have more of an eye for growth and success potential. If you are committed and make a good pitch, the fortunes of your business can turn around overnight.

Of course, you may be looking for something less dramatic than a business angel investment. If you needed the loan in order to make a purchase above and beyond your normal expenditures, you may wish to consider some form of asset finance. The most common option here is a hire purchase arrangement, in which you gain immediate usage rights over a piece of equipment or infrastructure, paying for it over the long term with manageable lease instalments. Alternatively, you could explore the world of invoice finance, in which a finance agency provides your business with a lump sum in return for the rights to the receipts from a batch of your outstanding invoices.

Whether you opt to seek direct investment, asset finance or an invoice financing deal, there are a great many options to pursue which do not involve bank lending. Don’t give up hope, just because a bank has chosen not to approve your loan!

We can offer you financial solutions to help keep your cashflow healthy. Request a quote now to find out how much invoice finance can save you.

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