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Answer from our Guest Expert Peter Hupalo of Hupalo Ltd.
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Strategies for Finding Your Funding
Since this Mr. Potter has knocked the wind out of your sails, here are some strategies to help you pull yourself up by your bootstraps.
Shop around for a loan. Being in biz for eleven years is a big deal and other banks will give that more weight. So go shopping at more banks. More and more, the Internet is helping small business owners seek and find lending. In addition to checking the websites of some of the larger banks, try to locate some financial Internet portals that channel small business loan requests to multiple sources of finance. (If anyone knows of reliable financial small business portals, please post.)View your search for a loan as a numbers game. There's no disadvantage in approaching multiple banks. If rejected, ask what you can do to improve your chances of getting the loan in a year or so, and ask what factors most influenced them against the loan. Approach it openly, not as if you're going to immediately argue the counterpoint to them, but rather to learn what you can do next time to improve your business's position to obtain a loan. If the bankers think that you're just going to argue with them about their present decision, they won't be nearly as helpful.
Seek to minimize a bank's risk in loaning you money. For instance, consider having someone else agree to pay the loan, if the business can't. Personal guarantees are always an option, if your business is incorporated. But, I'm not a big fan of putting personal possessions at risk. Another source of such a guarantee is the federal, state, or local government. These agencies often have a mandate to help small business and employment. Contact your local government resources for more information.
Consider closing out any unneeded lines of personal credit, if you're a sole proprietor. For example, maybe you have a charge card you never use that has a $5,000 credit line. Often, bankers will consider what would happen if you tapped all your untapped credit and base decisions upon this.
Think about other financing options, such as bootstrapping from your current earnings and cash flow and, possibly, angel investors. For new ideas, I'm not a big fan of debt financing. Too often, the idea fails and you're left with a financial loss. If you've lost money you've already saved, although uncomfortable, your present company will survive. But, debt remains with you and can endanger all that you've worked so hard to build.
Finally, and I know it's easier said than done, but try not to feel defeated by a loan rejection.
You've been successful and are doing what you love. That's something most people can't claim. And you have many options for going forward. A great thing about Idea Cafe is that it gives you the chance to sound off and realize what you're feeling is felt by many other entrepreneurs.
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