Question – I have been pursuing a SBA loan without success. I managed to get a $5,000 loan from my bank that I am paying to try and build credit. My credit score is 583. I am frustrated because I have an enormous opportunity to make money through manufacturing and production of industrial electric components. I have all my tools already as I work in this field already. I need to acquire a building and materials. I have even shown a contract that General Electric has submitted for my review. I have shown a GE contract to loan officers and am still declined. Are there other sources? Any advice on what I can do? I don’t want any investors really, just a loan. I am looking for $40,000 or more. I have tried small amounts from several lenders and that has proved ineffective as well.

Our Response – 

While the bank loans are currently very difficult to obtain in this economic environment there are a few solutions.  The best option in my opinion is to look at revolving loan funds.  Funds are provided from the Small Business Administration (SBA), United States Department of Agriculture (USDA), Economic Development Administration (EDA) and state programs and typically funneled to economic development agencies to create jobs in local communities.

Another source that may be appropriate is asking family and friends or finding investors.  While it’s hard to ask others for money, this is a good option if you set expectations from the start.  Be sure to put your agreement on paper on how much you are borrowing, what interest they will receive and when they will be paid.  Doing this step upfront will keep everyone on the same page and keep friendships from falling apart due to money.

An emerging source of funding is peer to peer lending.  Exchanges such as and allow individuals to loan money for a variety of reasons.  Interest rates vary depending on credit and collateral isn’t needed but you have the opportunity to explain your situation and can entice others to loan money for your project.

A last source and it is more of a last ditch effort is through credit cards.  Business credit cards are a lot easier at the moment to get versus business loans so they may be an option.  I would only really recommend this route if you will be able to repay them quickly.