Jumping Those Startup Roadblocks: Finding Funding After the Bank Turns You Down

Businesses need capital. Without it, they starve. If you’re like most business owners, you’ve probably faced down some tough financial challenges in your life. Here’s what savvy business owners do to turn the tables on banks when they won’t play ball.

Borrow From The Internet

Online lending has really taken off in recent years. OnDeck and Kabbage have become a popular alternative to a more traditional business loan. Online lenders have a few key advantages. One of them is speed. An application only takes an hour to complete. And, decisions are made within days.

The traditional loan process can take weeks or months. According to former U.S. Treasury Secretary Larry Summers, online lenders are poised to capture more than 70% of small businesses.

This is good news for pretty much every company, from the local bakery, to law firms, like Dallas motorcycle accident attorney, Tatelawoffices.com.

Because banks are traditionally squeamish when it comes to lending to small businesses, online lending may not just be your best hope, it might be your only hope.

Do Product Presales

When you’re hurting for cash, one way to get it coming in is to offer a presale for something new that you don’t actually have in-stock yet. Presale items are an excellent way to raise money so you don’t have to pay for the inventory beforehand.

Entrepreneur Priska Diaz, for example, raised $50,000 for her company Bittylab by preselling her product Bare (air-free baby bottles). By doing this, you also have to manage your cashflow to make sure customers understand that they are buying a presale item, and that it will be shipped at a future date.

This carries an inherent risk. If you don’t deliver, you could wind up owing people a refund or worse. Sometimes, customer complain to authorities, and you may have to face a state or local regulator or pay a fine.

Ask Friends And Family

Friends and family remain one of the best sources of startup capital. Borrowing from friends and relatives does come with challenges though. Most people don’t like mixing business with personal, and money issues can stress even the best relationships. But, if you’re confident that it won’t ruin yours, then ask anyone you know. Not only are they your biggest supporters, they will be there for you when others won’t. And, they won’t do a credit check on you — they already know, like, and trust you.

Side Hustle

Small business owners who haven’t yet made enough money to stand on their own business income often find they need a “side hustle.” A side business might just be what you need to feed the main business. Entrepreneurs like Alex Genadinik used his revenue from tours he organized on ComeHike.com to build his own business, Problemio.com. His business builds mobile apps for planning and starting a business. Neat, huh?

After getting donations for some of the hikes he led, Genadinik started to charge money for events. This is where he marketed his new site to hikers.

According to Genadinik, he tried traditional advertising, which didn’t really pan out. What did pan out was using one gig to feed his business.

James Bailey is a business consultant. He works mostly with start-ups on the finance side of things. When he has the time he shares his recent insights and ideas in his articles which appear on business blogs.