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.
- 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.
- 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.
- 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.