Has your small business credit application been rejected by your bank? Are you looking to open a franchise and can’t get franchise financing?
If you tried to get a loan from one of the big banks (defined as having $10 billion+ in assets) you are not alone. These banks approve only a little more than 1 out of 10 requests for small business loans (Biz2Credit Small Business Lending Index).
While this might be cold comfort to you and your dream to own your own business, don’t give up as there are many small business loan alternatives. For example, many budding entrepreneurs will borrow money from family or friends, take a second mortgage on their home, or finance their franchise with credit cards. While these small business financing strategies may work for some, the odds of long-term success may not be much better than the odds of obtaining a small business loan from a big bank. The problem with all of these strategies is that the debt burden can overwhelm a budding small business before it has a chance to succeed.
An alternative strategy that can finance your business without incurring debt is sometimes called a retirement owned business (robs) strategy. This strategy allows you to use your 401k, IRA or other retirement funds to finance your business. To learn more visit our 401k small business financing page and schedule a free consultation with our Harvard-law trained attorney.