Declined for a loan? The different meanings of ‘no’.

If you listen to the popular press, it is easy to believe that there is no point in seeking funding for start up or for growth. Or that once your bank manager has said ‘no’ (or not responded), that all is lost.

 

Look a little closer, you will find that this is not the case at all. Whilst the banks emerge cautiously from their crisis, a whole new world of alternative funders has emerged – crowd funding has received much publicity – but is still only about 5% of the alternative market. There are private financiers who have been operating for 50 years or more and there are newcomers – often backed by big capital – looking to make themselves a place in the market, and there are Government supported schemes.- indeed business financing has evolved from a fairly staid area into a dynamic and evolving sector of business support.

 

If the bank say ‘no’, it isn’t the end of your dream, it is the start of a fascinating journey!

Of course, as any child will tell you, when the answer is ‘no‘ the correct comeback is always ‘why not?‘ You may or may not get a direct response. In reality the reasons why are likely to be:

You are looking for the wrong product: Perhaps you have applied for an overdraft, when a loan would be more suitable, or a loan when invoice financing is the most appropriate solution. There are a number of different funding products available – the ‘right’ one will depend on both the purpose and the information available.

The information is too old/not logical: It goes without saying that the better information is available, the better the chance of getting the deal you want. Good information need not mean glowing figures, but they should be reasonably current, legible and consistent.

We didn’t understand the application. Particularly with start up loans, there is a tendency to create applications from within the product or the idea. A lender doesn’t need 100-page technical product specification, what they want to understand is the operation of the business. It is all too easy for this key information to be lost amongst superfluous detail.

You don’t meet our criteria: What sounds like a vague & meaningless statement can be spot on. Every business has a sweet spot – just because your business doesn’t suit one lender, doesn’t mean there aren’t others who will jump at it!

You shouldn’t be borrowing: Let’s be honest, sometime’s it is true – the lender is actually doing you a favour by not dragging you further into debt, or throwing cash into a black hole.

Whatever the reason your bank say no, we can evaluate and give honest feedback on the information available.

 Mark Jones runs Funding Portal, a leading source of alternative business funding & start up loans in the UK.

His direct number is 07932 075 754