What to Do if Your Minority Business Loan was Rejected?

Obtaining a minority business loan requires a good credit history, sufficient income, and a winning business plan. When you fill out a business loan application, your dreams are often riding on its acceptance. If the loan is declined, it can be a devastating experience. Once you are rejected, do you simply have to give up and go get a job? Luckily, there are other alternatives if your minority business loan is rejected. Here are a few things to consider when looking for alternative business financing.

Venture Capital

One avenue that is often overlooked is that of venture capital. Venture capital is a form of private equity financing that is provided by high net worth investors. The investors can be individuals or institutions. The important thing about venture capitalists is that they always look for growth. If you can prove that your business idea has a large potential for growth, venture capitalists will listen. They are not so much concerned about a proven business model as they are with potential.

Venture capitalists are experts in their respective fields and they know how to identify good ideas when they see them. If you have an innovation in the industry that they feel can make a large profit, they will be more than willing to give you the money you need. They will give you cash in return for shares of the company. Their investment can be made back if the company is successful and becomes a publicly traded company. While it is rare to be picked up by a venture capitalist, the opportunity is extremely lucrative.

Bootstrap Financing

Bootstrap financing is a method used to finance a project without using a business loan. You have to look around and see how you can generate cash without borrowing money. One common example of this is to get a home equity loan. You will have to intermix your personal and business lives, but if you can get the money you need it can work. Your equity is just sitting there unused, and if you can tap into it, why wouldn't you?

Another common bootstrapping method is to borrow the money from friends or family members. You could gather a group of friends and family members and try to find multiple investors. Each investor will get a certain share of the company or be paid a set rate of return on their investment. The important thing to stress is that it is a business investment. They are not expected to give you the money, only loan it to you at fair interest.

Hard Money

Hard money loans are another form of private lending except it is more commercial in nature than venture capital. Hard money lenders are individuals who want to get a higher return on their investments. You can find them online, in the classified ads, or even in the phone book. They lend people money who need it badly and they charge considerable interest for it. The terms are not the most attractive in the world, but they are better than not starting your business.