You need to be flexible to succeed. Know your alternative options in case the banks fail you
It’s no secret that the recession made banks wary of lending to businesses. However, just as things were starting to pick up again, there might be another threat. Experts are suggesting that the recent vote for the UK to leave the EU could lead to banks tightening their restrictions on lending. No one seems to know much about what will happen when (or even if) the UK exits the European Union. And therein lies the problem for banks and other institutions. The idea of lending to start-ups going into an uncertain economy doesn’t appeal. So how can businesses find the funding they need?
Demand for Government-backed Loans Post-Brexit Vote
According to the Financial Times, people will be asking for loans from the Government if the economy slows post-Brexit. But there could be tighter restrictions on who can get a loan from the bank in the future.
Taking out a loan to start a business can be a lifesaver for some, including many who are unemployed. However, without bank loans, they will need to go elsewhere for the money they need. The Start Up Loans Company already exists for people to get government-backed loans. As many as 45 per cent of people who receive loans are unemployed before applying. Up to £25,000 is available for each loan, and multiple partners in a company can apply. The company’s chief executive expects demand to grow if the economy takes a downturn.
Alternative Business Lenders
There are other ways to find the money needed for a start-up. Banks aren’t the only lenders, and you don’t have to choose the Start Up Loans Company either. Homeowners with bad credit can rely on online secured loans. But there are other options if you’re not a homeowner. One example of an alternative lender is Enterprise Answers, a not-for-profit lender. They have helped 400 business in the last ten years. They offer loans between £5,000 and £100,000. The lender is specifically for business owners who have sought funding from a bank but have been turned down. Chief Executive, Graham Latus also expects demand for loans to increase in response to Brexit.
Crowdfunding has been growing in the last few years as a method to fund many things. People use it for creative projects, charity fundraising, and even travel. As a fundraising method for business, it can be fantastic or it can be a flop. In order to make it work, it’s necessary to do more than set up a fundraising page and share it on Facebook. Business owners need to work hard on a campaign that will get people to donate. It might need to include a professional video and great perks sent out to donors. But with an attractive product or service, many businesses do have success with crowdfunding. In particular, it can help you to develop or roll out a product.
Even in tough economic times, there are ways for business owners to get the funding they need. However, they need to consider alternative approaches when the banks aren’t playing ball.