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Our survey identified 5 common barriers faced by entrepreneurs: not having the cash for a down payment; lack of knowledge about financing options; low credit scores; not approved for a bank loan; and an unwillingness to take on debt to finance a business.


Guidant Financial partnered with LendingClub to survey over 2,600 small business owners across the country in our State of Small Business campaign. Released earlier this year, these survey results highlighted the struggle that current and aspiring small business owners have faced in finding small business funding.

In this post, we’ll walk through these issues and discuss a few solutions to each.

1. Don’t Have Cash for a Down Payment

Over half of survey respondents said that lack of cash for a down payment was one reason they did not have small business financing. Fortunately not all financing options require a down payment. For example, Rollovers for Business Start-ups (ROBS) is a funding method that allows you to tap into retirement funds to start or buy a business, tax- and penalty-free Since ROBS is not a loan, there is no down payment required.

Sound too good to be true? It’s not. The ROBS program was made possible by Congress and the IRS in 1974, as a way to give American works another avenue for building their retirement assets. Check out our Complete Guide to Rollovers for Business Start-ups to get a full rundown of what ROBS is and exactly how it works.

In addition to using retirement funds to finance your business, ROBS can also be used to pay the cash down payment for a business loan. Instead of using ROBS to access the full amount you need to fund your business, you can access the 20 to 30 percent down payment required for a small business loan.

2. Lack of Knowledge About Small Business Funding Options

The world of small business funding can be confusing and overwhelming. There are a lot of options, each with their own set of rules and qualifications. Let’s break down the four main categories of funding methods:

  • Self-funding. These self-funding methods help you start a business without debt, as you’re using funds you already have. Paying cash or using ROBS are both methods that fall into this category.
  • Equity financing. Instead of cash, this category focuses on trading equity in your business for funds to finance it.
  • Secured business loans & collateral-based options. These methods are primarily debt-based loans that require a cash down payment (like an SBA loan) or collateral to secure (like your home, property, or stock portfolio).
  • Unsecured & Collateral-free loans. These options vary widely and can include such options as online business loans and credit card financing.

Take a look at our Complete Guide to Your Small Business Funding Options to gain a more in-depth understanding of the different financing methods available to you.

You can also give Guidant a call at 888.472.4455 to have a free, no-pressure conversation with one of our funding experts to learn more about your options.


Learn more about your funding options: Pre-qualify Today.


3. Credit Score Disqualifies Me from Certain Options

Some financing options do have minimum credit score requirements. If your score does not meet those requirements, consider financing options that have no score minimum (like ROBS) or work to bring your score up.

Check out Understanding Credit for Business Financing 101 to get a better idea of how credit plays into your financing options and how to improve your credit score.

4. Wasn’t Approved for a Bank Loan

If you’ve been turned down for a loan, you’re not alone: 80 percent of Small Business Administration (SBA) loans are denied, and many entrepreneurs never learn why their applications were denied.

To ensure your SBA loan application is as strong as possible, follow the 5 C’s that banks look at when determining your eligibility as a borrower:

  • Capital – How much cash you can contribute to this project
  • Credit – Your credit score, history, and utilization
  • Capacity – Your cash flow
  • Character – Your experience in the field of your planned small business
  • Collateral – What you can provide as collateral, other than cash

In addition to ensuring your application speaks to these elements, you can also work with a loan packager. These experts, like our packaging team here at Guidant, shop your application out to a number of pre-approved banks. Packaging can move your loan application more quickly through the process and may help provide you with better loan terms as the banks compete for your business.

5. Don’t Want to Take on Debt

Many entrepreneurs are wary of taking on debt to start or buy their business. Luckily, there are some excellent debt-free small business funding options available — the foremost debt-free method being the ROBS arrangement. Because ROBS uses retirement funds that already belong to the entrepreneur, there is no loan involved and no debt to be repaid.

ROBS is a great option for those who do not have cash on hand to outright purchase a business (which is true of most entrepreneurs), don’t qualify for another financing option, or wish to remain debt-free as they begin the journey of small business ownership.

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