In our last blog, we revisited the topic of business loan rejections and listed a few of the reasons so many business owners have endured them. Among the reasons banks reject loan applications are applicants not having enough collateral, having low credit scores and not being in business long enough. Of course, that’s not an extensive list. So we thought it wise to continue looking at why banks tend to reject loans in today’s blog.
You have submitted too many applications.
It’s important to remember that with each and every loan application you submit, your credit score takes a hit. Your best bet is to hone in on one application at a time. Begin with the financial institution you’ve had the longest and strongest relationship with. Take the time to submit a strong application so that your approval odds are greater. Each time you apply, you’ll be doing so with a lower credit score.
As Annabelle Amery of Become points out, a business owner that appears desperate for money isn’t likely to be approved. “If you have multiple loan applications going out to the same lender (whether intentionally or not), the lender will often deny you right off the bat,” she writes, “A ‘desperate’ borrower is typically not a sign of a ‘good’ borrower – at least in the eyes of lenders.”
You have a cash flow problem.
Are you able to comfortably manage your business on a daily basis? Are you making more money than you are spending to run said business? These are questions your bank’s loan officer will want answered in the positive. He/she will want to see signs that you’re able to make payments on time. Without maintaining a good cash flow, you’re not likely to earn the trust of your potential lender.
“Since your business’s current and projected revenue plays such an important role in your approval odds, as well as your future loan conditions, it might be safer to avoid applying until its financial situation has sufficiently improved,” advises Bryan Daly of Loans Canada, “In addition, it’s probably a good idea to start using financial management and invoicing software.”
You submitted invalid documents.
It’s imperative that, when you apply for a business loan at a bank, you submit accurate documentation. Without going over each and every step of your loan application with a fine tooth comb, you may omit some very important details. Again, with each application, you impact your credit score. It’s best not to waste a valuable opportunity by being lazy with the completion of your documents.
As Amery warns, “no matter how impressive your credit score is, how long you’ve been in business, or how strong your revenue is, etc. – if you submit documents that are inaccurate or incomplete, lenders won’t be able to confirm that all of those shining credentials of yours are as great as you claim.”
Synergy Merchants’ unique merchant cash advance program enables all types of business owners to get their hands on much-needed funding. Regardless of your credit score or cash flow situation, you can be approved in less than 24 hours! For more information, please don’t hesitate to call Synergy Merchants at 1-877-718-2026 or email us at firstname.lastname@example.org. You can also apply online for a free, no obligation quote!