If your business has a poor credit rating, is highly leveraged or has recently been turned down for bank finance - you may find non-bank finance easier to obtain, more flexible and possibly cheaper. Your options include:
- Family and friends can offer credit on a flexible, long-term and low-cost (or free) basis. You should make sure that the terms of any loan are clearly understood by both parties. See financing from friends and family.
- Aim to attract outside investors - eg by selling shares to business angels or venture capitalists. This can provide short-term finance without the need for repayment, and can also bring in expertise along with funding. However, it usually means giving up shares in your business, and investors may want some control over its management. See shares and shareholders and equity finance.
- Crowdfunding is where a number of people each invest, lend or contribute small amounts of money to your business or idea. If you seek funds this way, you would typically set up a profile of your project on your website then use social media and various networks of business, family and friends to raise the money. See crowdfunding.
- It may be worthwhile finding out if you're eligible for a grant. You may have to fill out detailed application forms, but if the grant is awarded, it will be time well spent. You may be able to get grants to help market your business, buy equipment, or renovate premises. See grants and government support.
- You could consider taking out a second mortgage on your home, although if your business is not successful you could risk losing your home. Credit unions provide cash at reasonable repayment rates or you could approach a micro-finance lender.
- You could also consider keeping on your current job or finding a part-time job and running the business in your spare time. This can be tiring as you will be working long hours, but having a job will guarantee an income while your venture takes shape. See start a part-time business.
The important thing to remember is that if you do decide to borrow money, always check out the terms thoroughly and don't borrow more than you can realistically repay.
If you have been refused money, review why you haven't been successful. Perhaps you need to rethink your idea to make it a more attractive option.
For more information see business financing options - an overview.