^Financing
How Am I Possibly Going To Buy This Store From You?

Adventures in Fundraising

Financing can be one of the most intimidating parts of running your business. The Way Up entrepreneurs may be successful, but they’ve all run into common fundraising roadblocks when starting or expanding their operations. Here are three stories of how they solved them.

I Got Denied by Every Single One

Jenny Nguyen had a great business idea. Every lender told her so. The only problem was they wouldn’t give her any money to start it.

“I got denied by every single one,” Nguyen said about trying to find the starting capital for The Sports Bra in 2021. “Usually, the phone call [from the lender said], ‘Listen, these are the reasons that we can't loan you the money.’ And it was basically the big three. ‘One, we're in the middle of a pandemic. Two, you've never owned a business before. Three, this is a concept that literally has never been done before.’"

“But all of them saw the business plan and [said], ‘But listen, we really think this is a great idea.’”

Financing denials are common, whether it's for a startup like Nguyen was trying to launch or a complex, multi-city operation like The Sports Bra is growing into. In fact, 82% of the businesses that responded to a recent Square Banking2 and cash flow survey said they were denied financing on their first application, and 35% needed three or more tries before being approved.

Nguyen decided to turn to crowdfunding. As it turns out, the Portland community felt the same way as the hesitant lenders. She was sanding a tabletop at The Sports Bra’s soon-to-be dining room when her mom texted and told her to check the campaign.

“We were seeking about $49,000 and we met the goal in nine days, and we closed at just over $105,000,” Nguyen said, adding donations skyrocketed after a local magazine highlighted her concept. “That was the first time we really put it out in public, and to get that kind of response … it was unbelievable.”

Key Takeaway

When it comes to financing, hearing “no” is just the start of the conversation. You may have a strong pitch deck, know your numbers, and still not get the money you’re seeking on your first several tries. If this sounds like your experience, consider these four things:

Don’t take it personally: A “no” isn’t an indictment of your idea. Your business may not fit the investing profile or vertical the lender is interested in.
Take critical feedback to heart: Very few businesses look the same as when they were conceived. If lenders are taking the time to give you advice on how to make a more compelling pitch, think about how you can incorporate it into your plan.
Re-evaluate how you’re tapping into your network: For Nguyen, word of mouth plus a crowdfunding campaign led to media coverage that generated the money she needed. Her idea was always a winner. She just needed the right people to hear it.

Consider nontraditional lenders: If you're sticking to your local banks or credit unions, you may not be looking wide enough. Nontraditional lenders — including Square Loans¹ — can often provide access to the funds you need. (Bonus: If you're already a Square business, you're likely pre-approved, and your application won't impact your credit score.)

The Ultimate Installment Plan

Buying a business sounds like something wealthy people do. So Pete Mulvihill and two other Green Apple Books employees were surprised in 1998 when their retirement-minded store owner asked if they’d like to take it off his hands.

“The first thing I said was, ‘You know what, you pay me. I have no money. How am I possibly going to buy this store from you?’” Mulvihill said.

Mulvihill, who joined Green Apple in 1993, wrestled with the idea before entering into negotiations with his two eventual co-owners, settling on a 10-year buyout plan. But even then, he wasn’t sure he’d turn the store into his career.

“Even in year two or three, I didn't think I was going to make it 10 years,” Mulvihill said. “I just thought it's like buying your apartment instead of renting an apartment; I'd have equity if and when I left. So it wasn't until probably the third or fourth year that I thought, ‘You know what? I could do this for the rest of my life.’” Tim Vala was able to get his first plot of land in a similar fashion. He rented the first 17 acres of what would become Vala’s Pumpkin Patch for multiple years as he saved up to buy the plot.

“There was no way we could go to a bank and borrow money,” he said. “I was fortunate to find a farmer that could finance us a little bit. And he was retiring, and I think he kind of liked the idea of the money coming [during his retirement].”

Key Takeaway

Complex businesses like Green Apple — where Mulvihill does everything from negotiating with his employees’ union to coordinating with an array of major industry vendors — need creative financing solutions. Drafting your business’ version of this script could be a creative way to reward employees with minority ownership, raise key funds for expansion plans, or pivot to another venture by slowly selling out of your current business. (See how Square-powered business MudFire navigated a similar situation with owner financing.)