It’s one thing if you’ve identified a gap in the market and pursuing a business to fill that gap is somewhat of no-brainer, but it’s another thing altogether if you’re an eager entrepreneur with something that’s as close to an original idea is ideas get these days. Whatever your idea to generate profits may be in the case of an entrepreneur, chances are its blueprint isn’t like anything the banks are used to seeing and so they’d likely give you a really hard time about lending you the money to fund your venture.
By no means does the bank saying “no” to your loan application to fund your venture mean that your idea a terrible one though. For all you know, the person tasked with assuming the role of the old-style bank manager who’s responsible for vetting business plans with a view of possibly funding them can see how your idea could turn into a real success, but they’re bound by the strict lending criteria banks typically adhere to.
This doesn’t only apply to what convention would otherwise refer to as “crazy” or “radical” ideas however, but also to some of those ideas which are straight-forward in every way possible. So even if you perhaps have a confirmed order for the supply a certain goods for example and you’re all but guaranteed to make good profits as soon as you can honour the supply side of the deal, you’d think that the bank would jump at the chance to lend you the money, but that’s not always the case.
It isn’t just the risk that banks look at in deciding whether or not to fund a business idea or venture, but both the risk and the reward. So if all you really need is a quick £1,000 in cash and you’re all but 100% sure within a couple of months you will have doubled or even tripled that amount after furnishing the required supply of goods, services, raw materials, etc, it’s very likely that the bank doesn’t see those returns as something they should bother themselves with because of the interest rates banks typically charge on such “micro-loans,” the subsequent earnings they’d make thereof and what you’d have to put up as collateral should the venture fail.
That’s where looking at alternative lenders comes into play extremely well since you don’t really have to go through the rigorous process of drawing up a comprehensive business plan if say you wanted a short-term loan from the likes of Mr Lender. Yes, the interests you’ll have to pay as repayments are quite a bit higher than what the bank would hold you to, but that’s exactly what these types of loans are for — getting some cold hard cash in your pocket which is required for use over the short term, so by the time you make your first repayment as an entrepreneur or business person who has a sure-fire venture lined up, you can perhaps even go all the way and settle the outstanding repayment in full.
So if the bank won’t lend you the money, it really doesn’t mean the idea isn’t worth pursuing.