If you run any kind of business, you will likely need to borrow money at some point. You may need the financing to get your small business off the ground. You might require the funding for an expansion of an established business.

Getting a loan is sometimes a necessary aspect of running a business. Whether you're starting a new business, need funds to survive a rough period, or want to expand an existing business, you may need to secure a loan. As BusinessLenderMatch.com Director Frank Kasimov has stated, the "number of small businesses that need a business loan keeps increasing every day". The good news for your business is that although getting a loan through a bank may not be an option, securing one via an alternative lender is a more viable option than ever.

In the past, securing a loan through a bank was the standard route to take for most businesses. Unfortunately, many businesses (especially the smaller ones) may have trouble getting bank loans in this ever-changing economic climate. This may be due to a variety of reasons--but regardless, you have some viable alternatives to a bank loan. Before you look at those alternatives, you might want to explore a few of the top reasons your bank won't lend you money.

Your Credit is Left Unused

If you haven't been applying for and using credit for your small business, you're already behind in the game. Just as it is when establishing personal credit, one of the best ways to build credit for your business is to start with small loans and credit cards before your business requires a more significant loan. This will help to establish you as a lower risk than you might otherwise appear to be. Once you get a little credit, be sure to use it--this is one of the most reliable ways to prove to lenders that your business can establish, sustain, and grow a line of credit successfully.

Your Business is New

If you're hoping to start a business, you can certainly do so with great success--but don't count on getting a bank loan to do it. Since the economic downfall of 2008, banks seem to be less willing than ever to loan money to new startups. Before they loan money to your business, many banks will want to see that it has a strong track record of stability and growth. This doesn't mean that you won't be able to get financing for your new business, but you'll probably need to forget about a bank loan for now and look elsewhere instead.

Your Lending Record is Too Diverse

While establishing some credit and using it are both good things, you probably shouldn't do so with too many sources. If you have several lines of credit established with a variety of sources, a bank representative may question your motives for doing this. The fact that your business requires so much credit could be perceived as a sign that you are a risk. In fact, having too much credit in too many places may even yield a lower credit score for your business. Ultimately, an overly diverse lending record can have multiple negative effects on how your business is viewed by a bank.

Your Flow of Cash is Unsteady

Another issue that may cause your business to be turned down for a bank loan is unsteady cash flow. Would you loan cash to someone who didn't show much evidence of cash influx in the near future? Banks operate from the same perspective. A bank representative will want to be relatively certain that you can pay off a loan as agreed. If your business doesn't have much cash flowing into it, a lender may be justifiably doubtful about extending a loan. By learning to more effectively manage the cash flow for your business, you will be more likely to secure a loan in the future.

Published on: Dec 31, 2015