Raising money for small business start-ups is typically one of the most important but also one of the most daunting tasks for entrepreneurs. Bank loans and angel investors are often sought-after forms of business funding, but the rates of rejection can be really high.
For example, in May 2022, Biz2Credit reported that big banks only approved 15.3 percent of all the small business applications it received. That means almost 84.7 percent were turned down! If you have been among that 84.7 percent or if your pitch to an angel investor has gone sour, it is not the end of the world. There are many things to be learned from rejection and many other opportunities to explore.
1. Turn Rejection into Constructive Criticism
Rather than being bitter that your small business loan request was rejected, see what you can learn from the experience. Ask the bank officer or the angel investor to tell you exactly why you were turned down. The answers will give you ways to improve your business model or clarify your pitch for future attempts.
2. Follow Up
As long as you are not pushy or overbearing, it is a good idea to follow up with those who have turned you down, especially if you have some new numbers or relevant material to make your case stronger.
3. Explore Other Funding Options
If you have not been able to find the right investors through traditional channels, try looking to sources. They may not be as ideal but could help in the short term. Crowdfunding is becoming more and more popular as is peer-to-peer lending. There are companies that offer microloans or merchant cash advance loans. You could also consider taking the equity out of your home to help get your business off the ground.
4. Keep a Long-Term Perspective
If you have experienced one or even multiple rejections, remember that is a very common part of starting a new business. While you are passionate about your idea, those with money to invest want more than enthusiasm to prove that your business model is effective. Keep working to improve your company as best as you can as it starts to show signs of success, you will be a much better candidate for traditional