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Securing business loans are crucial for entrepreneurs

Starting or growing a business often requires capital, and many entrepreneurs turn to banks for their business loans. However, securing a business loan from a bank isn’t always straightforward. If you’ve been turned down, it’s crucial not to get discouraged. There are numerous alternative funding options available that can help you achieve your business goals.

Here’s what you can do when you can’t receive a business loan from the bank:

1. Understand Why You Were Denied

Before exploring alternative funding options, it’s important to understand why your loan application was denied. Common reasons include:

  • Poor credit history
  • Insufficient collateral
  • Inadequate business plan
  • Low cash flow
  • Lack of business experience

Once you know the reason, you can take steps to address these issues. Improving your credit score, refining your business plan, or increasing your cash flow can make you a more attractive candidate for future loans.

2. Explore Alternative Lending Options

Online Lenders

Online lenders can be a viable alternative to traditional banks. They often have less stringent requirements and faster approval processes for business loans. Companies like Lendocity offer various loan products tailored to small businesses.

Credit Unions

Credit unions are member-owned financial cooperatives that often offer lower interest rates and more flexible lending criteria than traditional banks. If you’re a member of a credit union, consider applying for a business loan there.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending platforms connect borrowers directly with individual investors. Platforms like LendingClub and Funding Circle offer business loans with varying terms and interest rates, and they can be more accessible than traditional bank loans.


Microloans are small, short-term loans offered by nonprofit organizations and government agencies. The U.S. Small Business Administration (SBA) provides microloans of up to $50,000 to small businesses through intermediary lenders.


Crowdfunding platforms like Kickstarter, Indiegogo, and GoFundMe allow you to raise small amounts of money from a large number of people. This method can also serve as a marketing tool, helping to raise awareness of your business.

Angel Investors and Venture Capitalists

If you have a high-growth potential business, consider seeking investment from angel investors or venture capitalists. These investors provide capital in exchange for equity or convertible debt, and they can also offer valuable mentorship and networking opportunities.

3. Utilize Business Credit Cards

While not a long-term solution, business credit cards can provide immediate access to funds for short-term needs. Many business credit cards offer rewards, cashback, and low introductory interest rates, making them a useful tool for managing cash flow.

4. Leverage Personal Assets

If you’re confident in your business’s success, you might consider leveraging personal assets. This could include taking out a home equity loan, borrowing from your retirement savings, or using personal savings. However, be cautious with this approach, as it involves significant personal risk.

5. Improve Your Loan Application

If you plan to reapply for a bank loan, take steps to strengthen your application:

  • Enhance Your Business Plan: Ensure your business plan is detailed, realistic, and demonstrates a clear path to profitability.
  • Build Your Credit Score: Pay down existing debt, ensure timely payments, and rectify any errors on your credit report.
  • Increase Your Cash Flow: Focus on boosting sales and cutting unnecessary expenses to improve your business’s financial health.
  • Offer Collateral: Be prepared to offer assets as collateral to secure the loan.

6. Seek Professional Advice

Sometimes, navigating the world of business finance can be overwhelming. Consider seeking advice from a financial advisor, business mentor, or consultant. They can provide tailored guidance based on your specific situation and help you explore all available funding options.

Being denied a business loan from a bank can be disheartening, but it doesn’t mean the end of your entrepreneurial journey. By understanding why you were denied and exploring alternative funding options, you can still find the capital you need to grow your business. Remember, persistence and resourcefulness are key traits of successful entrepreneurs. Keep pushing forward, and you’ll find the right financial solution for your business.

At Lendocity, we understand the challenges of securing business funding. Our team is dedicated to helping small businesses navigate their financial options and find the best solutions for their unique needs. Contact us today to learn how we can support your business’s growth and success.