Reasons Why Your Business Loans Get Rejected

It is quite frustrating to get a business loan especially for those who are applying for the first time and are new entrepreneurs. They tend to go back and forth with the lender on the application process and start ending up confused. What is more disappointing in the process is when you end up getting rejected for the loan and don’t know what to do. If you end up as one of those entrepreneurs who applied for a business and gets rejected, here are a few reasons you can look out for.

  1. You failed to review and check your credit score before applying for a loan.

There are a lot of reasons on how a credit score is obtained. When it comes to business loans, your credit score plays an important role. There are even some cases where your loan application gets rejected solely because of your credit rating. If you plan on getting a business loan, make sure you review this one first. If your credit score is lower than what is usually required, make sure you work this up first before applying for the business loan.

  1. Your business’ cash flow is way to low.

When you apply for a business loan, one of the requirements that your lender will ask for is a business plan. Your business plan should reflect your projected and actual cash flow. Without adequate cash inflow, there is a high probability that your loan would be denied. Lenders and banks will want the business to be pouring in with cash. This will help them identify that there is little risk of not getting paid.

  1. You are at an early stage start up.

It is very seldom that a bank or lender will grant a business loan to a start up business. Even those businesses who are operating at an early stage will find themselves lucky to be granted a business loan. Lenders and bank would want security from their borrowers. One way to identify that a borrower is secured is through their duration in operating the business. Longevity is proof that the business can withstand economic and operating challenges.

Qualifications for Getting a Personal Loan

If you think that getting a personal loan is the best way for you when life starts to get expensive, then understanding how a personal loan is very important. Yes, life does get expensive. It can happen and bring you down suddenly when all your expenses seem to be growing by the minute.

Getting a personal loan is a good way to raise funds. It can be a means to help you with your current finances and assist you to find yourself back handling your financials. But be careful, without proper management of your personal loan, this can get you into spiraling debt and further trouble. But if you think that you’ve got this and that you know what to do, by all means, take advantage of what a personal loan can offer. Here are a few qualifications on getting a personal loan.

  1. Credit Score

Your credit score needs to be in good standing. A lender or a bank will definitely check your credit score when you go apply for a personal loan. They will want to know how you handle your credit and deal with debt.

  1. Income

You need to have a source of income for you to be able to qualify for a personal loan. Your income will often determine how much you can borrow from the lender or bank. Of course, the proceeds depend on your credit score as well. Income is an important factor. Without income, a loan will not be granted by the lender since it will mean that you don’t have anything to pull your payment from. Make sure that your income is sufficient and consistent. Commission based income can even be a basis for rejection since a lender would prefer a consistent one.

  1. Address

A lender would always want you to have an address you live in for at least more than 6 months. A permanent address is preferred. This gives the lender peace of mind that they would be able to reach out to you in case problems regarding the loans payment arise. Your physical address will definitely be playing a good role for approval.