Still Can't Get A Business Loan?

It is no surprise that small businesses just can't find the financing they need in today's market. Stock's are all over the place, banks are unsure of the future and thus hoarding their cash and the government is trying but still remains limited in what it can do - especially with mid-term elections on the horizon.

Not a great market to be a small business trying to raise capital. However, while this is a tough market for traditional business loans, there are a few alternatives that are flourishing - actually making up in some places where banks and other major financial institutions are lacking.

There are three factors that need to be followed in today's economy to secure capital for a small business.

First, if what you are doing is not working, quit doing it and try something different. There is no point in continually hitting your head against a wall - a wall that will not budge. In order to try something different, one must first start researching and understanding the numerous other options that are open to small or growing businesses - then pursue the best option. Sounds simple and it really is. Much better to use your time and energy looking for ways that will work for you and your business in securing that needed loan or financing then it is to continuously fight against the current. Banks and other lenders are not going to change their policies for you; so, you have to change to accommodate them. It might not seem right - but, it is what it is.

There is an old fable about a bee continuously flying into a window through which it could see the freedom that it sought. It kept at this window until it exhausted itself and died. But, had this bee just turned around and looked the other way, it would have seen an open door on the other side of the room. The moral here is not to be that bee. If flying into the window over and over again is not working - turn around a look for other avenues to get the results you want.

Second, get creative. If the banks are saying "no" then look for other lenders or capital providers that say "yes". There still remains a lot of money in this economy from personal wealth to private investment - money that can be tapped for the right deal.

Banks and other financial intermediaries are only paying fractions of percentages for deposits or CDs. The stock market looks as if it has hit a new plateau - showing little signs of huge returns for investors - professional or private. This means that those with extra capital are seeking new ways to employ those funds for better earnings - even common people or local businesses that have yet to think about lending that money out to budding business owners like you - you just have to educate them to this better way.

Get out and network in your community. Ask people for a loan or investment. They may have not even considered this option until you mention it to them - offer returns for their funds at levels that they could not get elsewhere - what other option do you have but to create your own lending market or capital resource bases.

Or, look to the new social lending industry that has really cropped up over the last few years. Many of these social networks or peer-to-peer lending sites offer unique ways for those seeking capital to meet and network with others who have capital and are looking for better returns.

Lastly, piece your needs together. More times than not, most new or young business owners think that their best financing scheme is to get an all-inclusive business loan - a single loan to meet all of their financing needs; saving both time and effort. But, this is just not the case today. Asking for too much at one time can create many new problems - like putting your loan request over the limit the lender is comfortable with or authorized to make or makes the deal just to complex for a lender in terms of valuing different collateral or matching different needs with different risks and terms - making it all too easy for the lender to walk away in search of easier bounty.

The goal here is to match funding sources with each business capital need. Thus, if your business needs both new equipment and working capital to complete some new orders or service additional customers - then seek out lenders who deal specifically with each of those types of loans.

Find an equipment lender that works with businesses in your stage of development and industry. For working capital specific to completing orders or building the business (not to cover overhead expenses like payroll or marketing) - look first to your current business assets like accounts receivable or purchase orders and lenders who deal with these specific types of funding activity - thus using the assts you already have or are working on to secure the capital you need for specific purposes - leveraging those assets to earn more revenue or customers for your business.

Following this creative method of financing could benefit your business in several ways.

First, you may start hearing YESes instead of NOs and second, if worked correctly, might even be a cheaper way to go in the long run.

Think about this - you go to a single lender and ask for an all-inclusive loan of $100,000 to purchase new equipment and obtain working capital for inventory to complete some new customer jobs. If they say yes, they may deem that your risk to them is higher than average based on the size of the loan in comparison to your business and price this loan accordingly. When all is said and done, you end up paying back not just the principal amount but an additional $100,000 in fees and interest.

But, had you broken down those requests based on specific needs - found lenders who specialize in those products - and reduced the overall risk in each deal; you might find that your overall rate of interest and fees is lower - thus paying back the original principal and only $50,000 in interest and fees. Makes for a much better bottom line for your business. You just have to get out there and work the deal.

If the banks are not lending because there is just too much risk in the market which correlates to too much risk for individual businesses - then find ways to remove or mitigate your perceived risk in the eyes of the lender.

Finding capital in this market is not easy, or at least the traditional ways are not easy for new or growing businesses. But, that does not have to stop you. You are an entrepreneur after all and entrepreneurs find ways to get things done - even finding capital in a bad lending market.

All it takes is a willingness to stop doing what has already proven not to work and put those efforts into finding ways that do work - it really is that simple and it starts with you.

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