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When banks say no, there are many other options for your business loan

It’s common for commercial banks to say NO, but that should not be a showstopper

It is widely thought that commercial banks are the only source of financing for business loans. Whilst this may not be a bad thought for big corporations like Nestle and Dangote Cement, small business owners need to think differently. Seven, if not nine, out of every ten attempts of small businesses to obtain a bank loan fail. Nonetheless, giving up on a great opportunity to scale up your business and execute your growth plan should be avoided.
The reality is that many commercial banks are not structured to serve the credit needs of small businesses. On that note, if you do not fit into banks’ risk assessment criteria and you keep getting turned down by commercial banks, look elsewhere; there are more alternatives than you can ever imagine, with nairaCompare here to support you through your search.
Other financial institutions, such as finance houses, fintechs, and microfinance banks are more welcoming to small businesses, so get on the train. They may be more expensive with higher interest rates when compared with commercial banks, however, if you think your business can generate enough profit margin and cash flow to meet up with the cost, it is advisable to consider it. As you leverage the high-cost loan from these alternative loan providers to scale up your business, you are de-risking it and building credibility. That’s a great fundamental value to negotiate down your interest rate, especially as those banks that turned down your application would begin to court you once they see that you are growing big.
With commercial banks now knocking at your door, offering to finance your growing business, you now have the bargaining power to either transit to a lower interest rate loan from the commercial banks or request your start-up partner lender to match the lower rate offer you have from the commercial banks to retain your business.
Having recognised this, it’s a chicken and egg game, you either use the higher interest rate loan to grow your business to a level that gives you the perceived credibility to attract lower interest rate loans or give up and the business remains small forever or even abandon the business idea because the commercial bank turns down your loan application. The choice is yours and like everything in life, there is an opportunity, cost or forgone alternative for every decision. Though you must be sure that the business is profitable enough to absorb the higher cost of loans from alternative lenders.
You are asking who they are and how to get across to the alternative loan providers, do a quick search on nairaCompare, we have many of them awaiting your application after you have compared terms to find what best suits your business growth plans. Interestingly, the turnaround time of alternative lenders can be incredibly short; some lenders process small business loans within 24 hours, even so, it may take a week for some others to process and decide on your application.
If you really believe in the business, project or idea and your analysis confirms that the payoff of the business or project is higher than the cost of the loan, then go for it, and explore the options to achieve your goals!
Some commercial banks are investing in their structures and technology to accommodate small businesses. We have most of those banks covered on nairaCompare as well, so you can put in your application to these friendly commercial banks, you may just be the right customer they are looking for, and they may just be the right lender for you. As you explore the options, nairaCompare will be there to see you through… All the best as you go fishing on nairaCompare.
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