I hear a lot of entrepreneurs complaining that the banks won’t lend to their business and feeling hard-done-by as a result.

Banks claim to be lending to around 80% of the businesses that apply for funding, yet entrepreneurs’ complaints aren’t without grounds. What the figure hides is that younger businesses are finding it far more difficult than their older rivals to get approval from the bank. If they’re relying on this traditional source of funding, start-ups and SMEs may not get the opportunities that they deserve.

We could indulge in squabbles about what’s gone wrong – missed Project Merlin targets, growing capital requirements and bankers’ bonuses. But instead I want to think about some alternative options. What can a business in need of money do when faced with rejection by the bank?

One option for funding is equity sharing. Of course, this has its downsides as individual founders become more accountable to their shareholders. But if you have a business with the potential to expand rapidly, this might be a very good choice. After all, it’s better to have a small share of a large business, than a large share of a small one.

Private business loans are another option worth considering. I appreciate that such loans have traditionally been considered something of a last resort. And fair enough, it might be more expensive than a bank loan. But as these become few and far between, more businesses are taking the private route. It’s not without its benefits – with good communication between the business and investor, you get the energy and experience of those with the money. And you can’t put a price on that.

When the banks aren’t lending, there are other options. But entrepreneurs, start-ups and SMEs will have to be more creative about their funding. If you would like to explore some of the possibilities for your own business, please do get in touch.