Bank Won't Make a Business Loan ... Now What

Study alternative financing sources such as angel investing groups, crowdfunding sites, and microfinance organizations, then prepare to prove you're worth betting on

Small business lending has been tight for the past few years, due to a combination of stricter lending standards embraced during the financial crisis and a downturn in loan demand. Although U.S. commercial lending is on an upward trend this year, startup business funding from banks tends to be nonexistent, even in the best of times.

Most loan officers want to see at least two years of solid revenue and a track record to fuel future success before they will consider making a small business loan. Add a bankruptcy on your record within the past seven years, and your chances with even the most knowledgeable and empathetic bank officer are pretty much nil, unless you have a business partner with good credit or someone who is willing to co-sign a loan with you.

Options to consider:

• Find ways to bootstrap your startup so that you can fund it yourself. (i.e. keep your day job and work on your business on nights and weekends)
• Talk to friends and relatives about whether they can help you with a short-term loan or small investment in your startup.
• Crowdfunding is a relatively new solution, facilitated through online platforms designed to support businesses and creative projects. (requires no credit reports)
• Microfinance may be an option for you. Check with your city or regional economic development center.
• Get to know some of the bank officers, perhaps through your local Chamber of Commerce or municipal business-development association, and keep in contact

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