Picture this, you have the interior designer hired, furniture purchased, blueprints created, and then, your business loan gets rejected! This is a nightmare scenario for any small business owner. You have an entire layout planned, but the most important part of the final picture is missing. How did this happen? Keep reading to find out reasons your business loan might get rejected.
Your Credit Is Too Low
Crehttps://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-is-a-good-credit-score/dit is an important factor in many financial realms, but it’s especially true for owning a business. If your lender deems your credit “too low” you might not be able to rent that space you’ve been dreaming of. What is “too low”? There is no magic number for good credit, because credit lending depends on the situation and the location. Instead of racking your brain of numbers all day, it’s a great idea to start tracking down what factors will go into your business credit score. This can help you to prevent issues like loan rejection from happening.
Your Business Is Too New
If your business is new, you might not have accumulated enough business credit to be eligible for a loan. Some lenders require you to be in business for a certain amount of time to qualify for a small business loan.
Your Business Is Risky
Some businesses like restaurants are high risk for failure. If your business appears to be in the industry of “high risk” you may have a harder time getting a small business loan. However, there are companies that are experts in this area and might be able to help you!
Your Credit Utilization Is Too High
Lenders keep track of your finances, and if you’re using too much of your available credit, in a short amount of time, you will be considered high risk. On the other hand, if you have too little credit, you might not be eligible for a loan.
You Didn’t Ask for Enough Money
It sounds silly, but if you ask a larger bank for a small loan, you might not be approved. Make sure you’re not underestimating the amount of capital you need.
Getting rejected from a business loan may feel like the end of the road for your business, but don’t fret! By reading through this list and taking your finances into your own hands, you can find a lender, like us, who will work with you and help in every possible way they can!