There are numerous options for small business owners to get their business financed, such as fast small business loans. If you have applied for a business loan, then you probably understand that it’s easy to get approved. Most of the time, small businesses are rejected for a number of reasons. Here are eight most common reasons why business loan applications get rejected.
Not having a good credit score for fast small business loans.
It is important for lenders to see that you have a good credit score. A good credit score means that you are a responsible and pay your bills on time. Businesses or people with low credit scores will have a hard time getting approved. Here are ways to rebuild your credit score: keep your existing credit lines open, pay your bills on time, keep your debts low, and refrain from applying for more credit cards.
Cashflow is one of the first things that lenders look at when evaluating loan applications. Lenders want to make sure that borrowers are able to pay the loans on top of daily normal operating expenses. You can improve your cashflow by making sure your business operates within its means. Make sure you assess your business’ expenses and cut off anything that is not necessary.
Lack of collateral.
Physical assets serve as a form of a promise that you’re going to repay your loan. Before you apply for a loan, compile a list of assets you can put up as collateral. If your business doesn’t have much to offer, you can use your own personal assets like your property or your car.
You lack in having a business plan that works for you.
A business plan helps small business owners to stay on track with their budget and avoid unnecessary expenses. Lenders and investors look at your business plan to see the potential for growth. Your business plan needs to show specific, measurable, attainable, relevant and timely goals for your business. If you don’t have one yet, start preparing one now!
Unreasonable intentions why you want to loan.
Make sure that the reason for your loan is solely for the growth of your company. If you want to loan money to buy your company a Tesla, think again.
When applying for loans, you have to make informed decisions. If you need any form of assistance when it comes to loan applications, feel free contact SMB Compass. We help small business like yours to get the funding you rightly deserve. Don’t hesitate to give us a call at (646) 569-9496 or email us at firstname.lastname@example.org.