How to Raise Capital After Being Turned Down By Banks

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Sometimes owning a business is a great position. Many people start a business because they love the work or they appreciate a challenge.

Yet one of the biggest challenges of owning a business, one that can be hard to appreciate, is discovering how to raise capital when you need a loan to continue operations. If you’ve recently been denied a loan or rejected multiple times, it may be time to start looking for other options.

Check out our guide for raising money after rejections below.

Problems with Raising Capital

Putting all your energy into raising capital for your business means your creative energy is going there instead of into the business. It ends up being an expensive journey, and it can even end in multiple loan rejects.

On top of that, the search seems to go on forever, and it’s hard to identify what investors have to offer besides money. Do you want a backer with many new contacts to potential customers? Are you looking for someone with experience in the industry?

Searching for capital also means you don’t have any privacy because investors want to do their fact-checking. While they’re busy doing their due diligence and investigating your company, you’re under a microscope. That can make you feel like you did something wrong, even if you didn’t.

Rejections and Plan B

There are many ways to raise capital, and not all of them are the right steps for your company to take. If you’re wondering how to raise capital after a loan rejection, then you’re not looking for just any alternative. You’re looking for the best ways to raise capital. 

You can make another plan. First, find out what the problem areas were. Why did the bank deny you the loan?

Any of these items can be reasons for rejection:

  • Poor credit
  • Lack of collateral
  • Low cash flow

Yet you should also consider that you may not have found the right lender yet. You have to find a good match for your business because your lender is a partner in some ways. It has to be a good fit for both parties.

How to Raise Capital Another Way

When you need money for your business, consider asking for help from a financial business consultant. Often a company like this can help you with creative financing, as well as consult on your business strategy and business loans.

They can open up new options like SBA loans, earnouts, and seller financing. They may also suggest options like mezzanine financing or funding scenarios. These are all ways to help you stay focused in a market that’s at odds with economic stability.

Strategy and Consultation

When you aren’t sure what to do after being denied a business loan, it’s time to look into better options. Putting together the right strategy with your financial business consultant can help you climb insurmountable obstacles and keep your business afloat despite the odds.

Raising money is never easy with the challenges we discussed above. Consider reasons you may have been denied and find some help to learn how to raise capital without the traditional bank loans.

Schedule your consultation today with Solomon RC Ali Corporation to get started with the financing you need.