As a business owner, you understand that not everything is certain and that even includes getting a loan.
You’ve done everything from drafting a plan and doing sufficient research but still got rejected. Instead of pondering on why you were denied, you can channel that into fixing what needs to be fixed .
Most of these reasons are completely fixable, there is no reason to why you can’t try again. When you’re ready to move past the initial rejection, you could start better positioning yourself for another application.
Here are five things you can do when you business loan application is rejected
1) Ask why you were rejected
First thing’s first, we mean to ask the lender why you’re rejected in the first place, not ask yourself and end up in an existential crisis after.
Lenders are in it for the rewards, hence are in a risk-reward business; to help reduce risk on the loans they make, they have their own requirements and match incoming applications against them. So, you didn’t qualify for a loan, there really should be a specific reason or two to why.
When you get denied a loan, you typically get a notification in writing that lists the details and factors which contributed to the decision. Whatever the reason may be, knowing why you were rejected in the first place is the first step towards fixing the issue.
2) Check your personal and business credit again
As much as you hate to admit it, your personal credit score has a major effect on your chances of getting a loan for personal or business use. If you’re a sole proprietor though, your personal credit score can also play a role in you getting a loan for your business as well.
Rejection letters from loans often include your credit score. If it seems lower than you initially think it should be, get a copy of it and cross reference that it’s in fact accurate. Lenders pull your credit score from differ credit reporting agencies, it’s important that you cross check what they have against what you have to ensure both sides have the correct information.
If you are applying for credit with your business’s name, even a solid credit report won’t be enough to approve your first loan. Businesses have their own credit reports and as a new business owner, a credit profile is likely no be non-existent.
3) Ensure the correct documents
Excellent financials aren’t all that if you don’t provide the lenders with proper documentation to work with as your loan will get denied either way. When your application is rejected, the frist thing you should do is to review the documentation that you’ve submitted for the loan.
Other than your credit score, your business’s financial status also plays a big part in getting approved for a loan. This can come as an issue for many startups; lenders would want to see positive business data like healthy cash flow, strong earnings before consider giving out a loan.
If incomplete applications triggered your loan rejection, make sure that you have all the right paperwork for your next application. If you don’t meet the financial standards, know that there are different lenders out there and you just have to find one the fits your circumstances.
As a small business owner, you don’t necessarily have to meet the variety of loan requirements out there, you don’t even have to meet a loan advisor face-to-face to get a loan approved.
Alternatively, you can reach out to alternative funding sources to provide small business loans and to offer a business funding estimate. If you’ve done your research, you‘ll understand how standards vary from institution to institution, so take a look around an familiarize yourself with what you’re taking in . Things were different before the internet and even before the Covid-19 pandemic.
5) Keep it going
Whatever the reason it may be that got your application rejected, giving up is not an option.
Just because your business was rejected a loan, it doesn’t mean that it’s not viable that it won’t go on to succeed. If you do come face-to-face to rejection, it can still be taken as a learning curb and an extra push for you.
Analyze the elements that led to the outcome and perhaps even try to find other lenders that cater to specific people like yourself.
Finsource Credit recognizes the challenges faced by SMEs and offer 5 different loans and financing options that are perfectly structured to suit the needs of different business persons.
With a clean loan, property loan, 2 in 1 financing, gap financing and invoice financing suited to meet your financial needs, our loan advisors are ready for your questions 24/7, contact us today to learn more about how we can be off assistance to your financing needs.
: 03-2712 4333