First, let’s get the facts out of the way. More often than not, banks deny business loan applications. It happens to everyone; big names in the market as well as small businesses. Do not despair because we will let you know what you might have done wrong in your previous application and how you can fix it now.
Banks must inform you as to why it is denying your application. The chances are that if the bank rejects your business loan application, you might receive an email stating the reason why. If you have not received such an email, you can always reach out to the bank. And if you do not wish to, you can self-analyze by seeing if one of the four reasons mentioned below has anything to do with you.
So, let’s jump in and understand why you didn’t bag that check.
Your loan application may not have made it through if your business has just kick-started. Lenders pay close attention to the history of the company to understand the potential it holds. If the results cannot vouch for you, it makes the lenders fear you may never return the loan.
To get your loan application accepted, make sure that you show them the numbers you want to see. If you give them a rough idea of how successful your business has previously been, you are surely going to get that loan application accepted.
If the industry you’re delving into has a higher failure rate, you may not be able to receive a financial loan to strengthen your business.
Lenders and loaning businesses wish to see you start a company that would promise them a return. If there are doubts regarding the industry you are stepping into, they may not be as comfortable loaning you the money. In case of a business failure, you may not be able to return the loan, which would put you in perpetual debt while causing the lender a substantial financial loss.
Try to research the business you’re starting to understand beforehand if it has a chance in the market.
If your business has not been performing too well, lenders would not be willing to take the risk of lending you a loan. An unsatisfactory performance would mean that the cash inflow is not very sound. A lack of positive cash flow may lead the lenders to question if you would be capable of returning the loan.
When writing an application, try emphasizing the numbers that your business has brought in historically. A solid financial history will give the bank or the lenders a sense of confidence in your business, giving you a better chance of getting that loan application approved.
Incomplete applications are the most common reason why lenders reject loan applications without even considering them; incomplete information on the application. If your application does not have the required documentation, it wouldn’t even make it into the reviewing stage.
Specific documentation is required so that the bank or the lender can analyze the company while also checking it for its authenticity. Trusting someone with a considerable sum of money is a game of risk, but a calculated risk nonetheless. The lender needs to understand the complexities of your business before they trust you with their money.
If you provide incomplete information, this will plant a seed of doubt in their minds, leading them to question your integrity.
If a lender denies your loan application, there’s no harm in trying again. Complete your documentation and realize your mistake to improve your loan application which may magnify your chances of getting it approved.
Loan application rejections should not set you back from your goals as they can genuinely be eye-openers for you to review and revise your business model. Work on the contents of your application while also paying attention to the performance of your business.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.