Some studies conclude that we spend more when we use credit cards than when paying in cash. You seem fascinating to me, since as many of my readers know and illustrated in this post, credit cards are my preferred means of payment.
That is why in my most recent posts, I have explored a little the subject of psychology applied to our finances since I believe that many of our money problems have to do with satisfying other types of deficiencies. The shopaholics are a typical example of this.
Why do we spend more when paying with credit cards?
Psychologists and behavioral economists have identified two fundamental reasons why we overspend when we use credit cards instead of cash:
We spend more because we do not have the same feeling when paying
The simple act of handing out cash – taking it out of our pocket to give it to someone else – is a sense of detachment that money is getting out of hand. That is, we felt that expense in a very vivid way.
On the other hand, when we pay by credit card, we sign a promissory note. The money, in that case, is abstract: we will deliver it sometime later. Emotionally it is a big difference: we are not feeling that money is getting out of hand. That is why we spend more.
Psychologists call this feeling a “bond” – or coupling in English. In this case, he describes how the experience of consuming something links to the understanding of paying for it.
When we buy an item in cash, our shopping experience to the feeling of paying, when we invite the family to eat at a restaurant, and the bill is several thousand pesos when paying in cash, we feel a sense of pain for the amount we must pay, which is intense and immediate. In addition, this pain is intricately linked to the pleasure of eating with the family. That is, it is significantly related to that consumption because it is experienced almost simultaneously.
On the other hand, if we take out the credit card, although we may feel an inevitable “pain” when seeing the amount at that moment, it is much less intense. The feeling of paying is actually “throwing” into the future. And when we finally pay for it, that experience will not be linked to the consumption that we made; we are unlinking the pain of paying with the pleasure of consuming. That is why we spend more: the experience of drinking and the pain of spending are not linked as they are when paying in cash.
We spend more because we focus on the benefits of what we buy, not on its cost
One of the natural consequences of decoupling the feeling of payment from the pleasure of buying is that consumers tend to overestimate the benefits of that purchase. That is another reason why we spend more when we pay with a credit card.
That is, the decoupling causes consumers to evaluate the benefits without considering the costs.
To give a simple example, suppose we have $500 to go to dinner at a luxury restaurant with our partner to celebrate our anniversary. We cannot take the risk that when the account arrives, it will not reach us. But sometimes, we do not want to limit our partner too much.
In that case, we try to limit our consumption and search among the cheapest dishes on the menu.
When we have a credit card that we know we can use, our behavior changes, it is evident that in this case, we do not have any concerns. We concentrate on enjoying the evening, without the total cost of the account we care too much. Come on, and we are celebrating, so we can even order a bottle of wine to accompany our food.
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.
In the era where the Internet dominates a good part of the economy and the business ecosystem, the boundaries between professional and personal are increasingly diffuse. Where the generation, access, and data traffic of any kind grows exponentially, our personal and professional, and business history is much more exposed. However, this does not always have to become an obstacle and can give us opportunities that would be unthinkable in another context.
When we talk about new technologies applied to the company, the first things that come to mind are marketing (usually online marketing), document management (cloud computing), or even the commercial area.
And if we talk about technologies and techniques such as big data, that is, the collection and massive accumulation of data for later analysis and search for trends, opportunities, etc. Between technology and business management, we leave a vital element for the start-up and the growth of any company or business: financing.
But if I finance my business, if obtaining credit or capital is a fundamental element for my project, why not also apply the virtues of the digital revolution and big data for it?
The new technologies have allowed the creation of alternative sources of financing intricately linked to the Network and offering a new window to entrepreneurs. Perhaps, crowdfunding platforms are the most representative (and best known) agent of this new way of conceiving financing, so far from traditional banking intermediation, but it is not the only one.
Technological progress allows us to go much further when it comes to finding financing for our project. Proof of this is creating new platforms that use all these enormous amounts of information and data to offer financing lines appropriate to the accurate profile and the needs of a project or entrepreneur.
What data do they use? Can my social networks influence my ability to finance my business?
Well, pay attention, because that seems to be the trend. Consciously or unconsciously, we have data about our companies and us on the Network, data that other companies can analyze and use to form a reasonably clear picture of how our business works and decide on our credit capacity.
And, although that point has not yet been reached, there is little left for it. Some recent landing platforms in Spain, such as Spot cap, already use the data provided by Amazon, eBay, or Presentation accounts, for those companies that sell online.
A priority may be that over-exposure to the Network can create suspicion. Still, the truth is that, in many cases, it can be advantageous when it comes to obtaining financing without the need to rely solely on the credit history of our company.
For example, they offer an alternative financing model for freelancers and SMEs based on data obtained from the aforementioned platforms to provide credit lines adapted to a reality closer to that of entrepreneurs and SMEs. Many influences more factors than merely financial ones.
A recent study by the Chamber of Commerce asserts that only 1 in 4 small businesses get the desired financing, while the injection of credit to large companies is increasingly significant.
When it comes to obtaining financing, especially among small businesses, time and flexibility are essential. Still, the long waits, the high demands of the banks, and the high conditions they demand mean that meaningful growth opportunities are often lost.
For this reason, it seems that the traditional ways of bank financing have begun to become an obsolete model unable to respond effectively to the real needs of SMEs and self-employed, which make up more than 95% of the Spanish business fabric. Today, the new possibilities that offer new technologies, the increasing connectivity, and the proliferation of intelligent terminals such as smartphones or tablets are the not-too-distant future for obtaining credit in small businesses.
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.
If you are determined to start, setting up a franchise can be a great idea. It is an exciting option both for those looking to make a living opening a business and those who have some savings and want to make a profitable investment.
First, you should know that the operation of a franchise consists of business collaboration between two parties. One is the franchisor, the company that created the brand, and the other is the franchisee, which would be you. An autonomous society that wants to open an establishment with the support of a brand already consolidated.
The agreement between the two parties is generated by a contract that establishes specific image standards, sales targets or business strategies, and the franchisee’s payment of a fixed or variable amount.
Why do you want to open a franchise?
Setting up a business of this type has many advantages, which we could summarize in three main aspects:
Comfort
If you have wanted to start for a long time, one of the obstacles you have encountered is likely finding a good business idea. Luckily, when opening a franchise, this work is already given. This and many other initial steps you must take to create a company, such as developing the business plan, managing suppliers and sales, the design of the image, etc.
Lower risks
When you open a franchise, you support a consolidated brand and the security of a business idea that has already proven its operation. In addition, you have the know-how (knowledge), training, and assistance of an experienced company. This means that the adventure’s chances do not go as you expected are much lower than when you start from scratch.
Greater competitiveness
Being backed by a brand allows you to specialize in a sector and compete on equal terms with large stores. You facilitate growth concerning more local businesses.
Tips for setting up a franchise
Despite all these benefits, launching a franchise also has risks and disadvantages. You cannot forget that it requires an essential economic investment and limits the business’s independence. Therefore, you must reflect and make a good decision. For this, we recommend the following:
Choose the franchise that best suits you
You will be one of the most complex points. And in 2015, 1232 franchise brands operated in our country, as the report the franchise in Spain points out. First, think about the sector: fashion, food, hospitality. From there, research the brands of the field you have chosen. You must evaluate the canon they offer, your obligations as a franchisee, the proven experience of thebrand, profitability, and future options.
Negotiate the contract
When the time comes, he asks specialized lawyers to help him review the contract and negotiate it with the other party. The goal is for both of you to win.
Find the perfect location
The situation can determine the success or failure of the business. Hence, you should study very well in which place you should put the franchise. Although much of the research work has already been given to you, you cannot neglect this point.
Find a way to finance yourself
Suppose you have the money, perfect. If not, beyond the traditional financing in the bank, you should ask for loans to friends and family, in addition to public subsidies. Try to save everything you can.
And, above all, do not rush
We know that it is challenging to stop the entrepreneurial impulse but setting up a franchise requires time. You must think carefully about each decision and each movement, so keep looking for options if you are not entirely sure.
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.
Every business requires an investment to either initiate, grow, or expand it regardless of its level (small or large). Especially in the case of small businesses, loans can play a significant role in supporting the commercial growth of a business idea, funding new research and development, providing aid in expansion into new territories, enhancing sales and marketing efforts, help in the recruitment process, and much more.
However, the process of loan-taking for small businesses can get a bit complicated for first-timers. It requires some extra effort and may induce anxiety for some people. Several questions can pop up while taking a loan. Therefore, some prior knowledge regarding the loan-taking process will increase the chances of acquiring a loan. Mentioned below are five key steps to assist in getting a small business loan.
Determine whether you qualify for a business loan or not
Before applying for a loan, it is necessary to evaluate if the business qualifies for a loan or not. A credit score of the company plays a vital role in the industry for the loan. Different lenders require different credit scores. Therefore, it is essential to calculate them beforehand. If the credit score falls below the threshold, the loan is likely to be declined.
Importantly, lenders need assurance for being paid back in time, therefore, the demand for information regarding early revenue of the business. So, it is necessary to evaluate the business revenue to calculate if a loan can be paid back or not. In addition to this, having collateral is also important for a secured loan. In some cases, lenders make it necessary to have collateral. Even though it is a risky step, it may reduce the interest rates, allowing to lend more significant sums.
Furthermore, the period a particular business has been in the market also contributes to qualifying. Online lenders and banks require one and two years of business, respectively.
Research potential lenders
Numerous lenders are willing to lend to small businesses, and you can discover many of these through online platforms. One can choose any lender after research that may seem suitable and appropriate for their business. Some of the main lenders are listed below:
Direct online lenders: Various lenders have made the lending process relatively smooth through easy online methods. It includes many reputable companies such as PayPal that provide fast, small cash advances, working capital loans, and a certain amount of short-term loans. Moreover, many sites act as a lead generation service, where multiple lenders can access on a single platform.
Commercial banks: For the small business market, large commercial banks act as the traditional lenders. However, the loan-taking process tends to be relatively slower due to the time-consuming and challenging underwriting criteria.
Local community bank: Several community banks tend and aim to make a business loan to local businesses in the region.
Peer-to-peer lending sites: Many sites act as an agent between the lender and individual. These lenders are known to make relatively quick decisions.
Figure out the purpose and amount of the loan
An essential step before acquiring a loan is to figure out precisely the purpose of the loan application. For a small business, a loan can be either for initiating the business, managing daily expenses, or growing the pre-existing business. It is essential to mention the purpose of the loan to the lender for transparency as it increases the trust level with the lender.
Furthermore, it is vital to calculate the exact amount of loan required since money ranges do not work when taking a loan. Listing the works and their costs appears to be helpful for such purposes.
Compile the required documents
For an accessible, smooth, and hassle-free experience, it would be helpful to gather all the required documents before starting the actual process of a loan application. Standard documents required include a resume, business plan, Business Credit Report, Income tax returns, financial statements, license, registrations, contact details, and commercial lease. Any further additional document may also be required depending on the lender.
Apply for the Loan
Once the business is qualified for the loan, the purpose and amount of the loan are determined, all the relevant documents are together, and an appropriate lender is selected. Finally, the business owner is all set to apply for a small business loan.
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.
There are numerous reasons why QuickBooks should be your first pick if you need a business accounting solution. QuickBooks Pro, Premier, Enterprise, and Accountant are all distinct versions of the software. QuickBooks has a solution for your specific accounting needs. However, which version is ideal for your company? Knowing this is critical before making the crucial decision. The top five favorite productivity features in the QuickBooks for every accountant are as follows:
Easy management of finances and reporting
You’ll need an end-to-end perspective of all your financial transactions for your business to obtain a good understanding of your income and expenses. It is available if you use QuickBooks Enterprise, which includes an “income tracker.” You may quickly input your expense transactions with this tool, including transactions from numerous bank accounts in one place and in less time.
With this powerful program, you can even merge reports from multiple corporate files. It is more convenient to export QuickBooks data in Excel format for later use. Other significant advantages of QuickBooks Enterprise include tracking costs conveniently, fixed assets, and tax deductions.
Easy management of inventory
QuickBooks Enterprise offers an advanced inventory tool that allows you to build sub-assemblies without manually entering them quickly. You also don’t have to be concerned about stock levels below or above a certain threshold. You may quickly establish advanced price rules based on parameters such as customers, items, vendors, and so on. Another advantage of QB Enterprise is that it allows you to enter data accurately by scanning inventory, serial numbers, or bar codes. You can even use it to generate barcodes. Every company needs to keep an eye on its supply chain. To receive complete, accurate visibility of your supply chain, you can start utilizing QuickBooks Enterprise. You can obtain industry-standard reports that include precise information such as the number of items on hand, sales orders, and purchaseorders.
You can also use QuickBooks’ Inventory center to locate inventory tasks by browsing inventory items and reports. With this program’s built-in inventory stock status report, even reordering your goods as needed becomes easier.
Management of user roles and permissions
Not every firm employee requires access to all types of business data and information. Additionally, having all data available to all employees raises the danger of data loss. With the help of QuickBooks Enterprise, it can reduce this danger. You can provide your employees role-based access to the data depending on their departments and work responsibilities. As the owner of your company, you will have central access to this program, from which you will be able to set user roles and issue permissions to your staff.
Track your sales and customers
Tracking sales and orders is difficult for any organization, whether small, medium-sized, or large. QuickBooks Enterprise is a program that can help you keep track of your sales more efficiently. You can track your sales agents and view expenses with this intelligent program, saving time and effort.
You can also use the QuickBooks Lead Center to track leads. You want to add as many clients, vendors, and workers as possible to expand your firm. When you use QuickBooks Enterprise, which has comprehensive user tracking tools, you can do this. With this software, you can send estimates or invoices, define, and use foreign currencies for sales transactions, create custom pricing, and much more.
Employee payroll management
Just like handling orders and customers, managing employees is essential for all businesses. You can cater to this aspect related to your business using QuickBooks Enterprise. Using this software, it is easier to calculate all your employees’ earnings, deductions, and payroll taxes. You can get and check customizable reports to track your employees and contractor time. If you want to save time running payroll, this software is all that you need.
QuickBooks Enterprise software is equipped with tools to assist you in managing your company’s accounting demands. It supports a variety of facets of your organization, including payroll, payments, inventory, and much more.
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.
Blockchain is a method for maintaining records that are difficult to hack or fabricate the data stored on it, making it safe and unchangeable. Blockchain is a form of distributed ledger technology (DLT), a digital system for simultaneously recording transactions and related data in various locations. To avoid a single point of failure, each computer in a blockchain network keeps a copy of the ledger, and all documents are updated and validated simultaneously. Blockchain is a database, but it varies significantly from traditional databases in storing and maintaining information.
Furthermore, a blockchain is a decentralized database controlled by computers in a peer-to-peer network rather than a central computer as in traditional databases.
Uses of Blockchain
The first prominent application to effectively employ blockchain was Bitcoin, which hit the market in 2009. However, since Bitcoin’s creation, the use of blockchain has spread to various applications. As a result, blockchain has become synonymous with Bitcoin and its competitors, such as Dogecoin and Bitcoin Cash. The global financial community and government central banks have been exploring blockchain technology as a foundation for digital currency exchange. Logistics businesses use blockchain to track and trace items as they move through the supply chain. Moreover, blockchain is becoming the foundation for smart contracts and other mechanisms for transferring and safeguarding intellectual property rights in various industries, including the legal community and entertainment. Indeed, several sectors are already investigating blockchain-based applications as a safe and cost-effective solution to establish and administer a distributed database and preserve records for all sorts of digital transactions. As a result, blockchain is rapidly evolving to record and exchange data among various corporate organizations securely.
How Blockchain Works
Blockchain operates in a multistep process; the steps are as follows:
An authorized participant enters a transaction, and the technology authenticates it.
This operation generates a block that reflects the particular transaction or data.
The block distributes to each computer node in the network, creating a chain.
Authorized nodes verify the transaction and add the block to the current blockchain. (Nodes on public blockchain networks are miners; they often receive compensation for their effort – often through a mechanism known as Proof of Work, or PoW – in the form of bitcoin.)
The transaction is complete when the update disseminates across the network.
Individual transactions and blocks are the two types of entries in a blockchain ledger. The first block comprises a header and data about transactions that occurred during a specific period. The blocks utilize timestamps to aid in the creation of an alphanumeric string known as a hash.
Following the creation of the initial block, each successive block in the ledger utilizes the preceding block’s hash to compute its hash.
A new block’s validity authenticates itself through a computational process known as validation or consensus before adding it to the chain. Most network nodes must agree that the new block’s hash has been calculated correctly at this stage in the blockchain process.
Once inserted, references to a block are possible in future blocks, but no further alterations are possible.
If someone tries to swap out a block, the hashes for prior and future blocks will also change, disrupting the shared state of the ledger.
When consensus is no longer feasible, the system notifies other computers in the network, and no new blocks are added to the chain until the problem comes to a resolution.
Typically, this process involves deleting the block that caused the problem and restarting the consensus process.
The Benefits of Blockchain
Experts cite several significant advantages of adopting blockchain. The most significant advantage is most likely security. Because the information is shared and constantly reconciled by dozens, if not millions, of computers, it is nearly challenging to damage a blockchain. Furthermore, blockchain has no single point of failure. Transactions may be more efficient than non-DLT-based transactional systems; however, public blockchains may occasionally experience slowness and inefficiency. It is resilient: No one is affected if one node fails since all other nodes have a copy of the ledger. It establishes confidence among network participants. Confirmed blocks are complicated to reverse, implying that data is impossible to delete or modify. It can be cost-effective since it frequently decreases transaction costs by removing intermediaries and third parties.
In Conclusion
Blockchain is still a relatively new technology, and we’re discovering new uses for it all the time. Will blockchain pave the way for a better, more secure future? We will have to see how blockchain technology continues to evolve to find out.
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.
Budgeting can indeed be a pain when you do not have the time to sit down and divide your money according to your requirements. A proper budgeting system is needed for every household to ensure that finances are used effectively rather than being mismanaged. Technology has evolved, and there has never been a better time to be alive. If you hate going through the hassle of sitting down, laying out all your finances, and then creating a budget, there is good news for you. There are now mobile phone applications in the market that do the deed for you. All you must do is find an application that works for you, then sit back and enjoy as you have one less thing to worry about in your life. Following is a list of applications that would cater to your needs of domestic budgeting.
Please ensure that you do your research before trusting an application with your financial data.
Mint
Mint is a free app available in the market for the sole purpose of budget creation. The purpose of the app is to allow you to keep track of your daily expenditure to stay within the limit while making everyday purchases. The app is extremely user-friendly, so it is one of the top-rated ones in the market. Mint suggests the option of connecting you to your bank account so all the transactions can be filed automatically. Those who do not wish to use this option due to privacy concerns could always manually add their transactions to the app. The only con this app has been the targeted advertisements that are a part of the app interface, although they are not that bothersome to a massive majority since the app is, after all, free!
PocketGuard
PocketGuard is your next go-to application if you want to cub your overspending habits. The app has been created with the primary purpose of curbing unnecessary spending by tracking all your transactions through your bank account. PocketGuard comes in two different variations; a free, basic version and a paid, premium version that goes by PocketGuard Plus. PocketGuard Plus costs its users $79.99 per year, which seems plausible according to the app’s services.
EveryDollar
EveryDollar is a budgeting app that caters to your budgeting needs as well as tracking all your purchases. The app has been created on the zero-based budgeting philosophy that focuses on creating equilibrium between expenses and income. The paid version of this application costs a whopping $129.99 per year, which may be a lot for some individuals, which is why it has the option of a free version. The central point that sets the two versions apart is that the user must manually add all the transactions to the app, which the paid version would do automatically.
You Need a Budget
You Need a Budget, or YNAB, is an application for those willing to invest some bucks to save some dollars.
The app, charging $84 annually, is one of the most acceptable applications for budgeting—the app sync to your bank account, which takes away your worry of manually adding each transaction. Due to the in-depth approach of the company towards budgeting, it has yielded excellent results in the past. It claims to save $600 in the first two months of usage. The app is known for being completely safe and strict on data protection as it uses high-level encryption. Those who may be concerned about paying a considerable amount could always avail of the 34-day free trial that the company offers. It would be enough time for you to realize if the app is for you.
If you’re looking for a free application to create a domestic budgeting plan for you, Mint should be your first option due to its remarkable results and user-friendly programming. But if you are ready to pay for the services, you should invest in YNAB because of the promising results with the application.
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.
If you’re starting a new business, you would likely require the help of investors to fund your venture. This monetary funding, of course, comes at a cost that is often a certain percentage of the business. But to get to that point, one must have the confidence to catch a big fish. Every investor would be willing to invest in your venture as long as they see potential in you and your pitch. It may not be that easy, but it is certainly not impossible. So, get ready and flash that smile because you are just about to get those investors to invest. Some tactics are helpful when one is trying to gain an investor’s confidence.
These seemingly simple steps could ultimately make or break your game.
Entice Them Through Your Results
The way your venture performs is what decides its fate. Investors need to, first, understand the product or company in which they are investing. If your company has performed well in the past, there is a high chance it would perform even better with a more significant investment onboard. While making your pitch, make sure to include the results of your previous sales; this will increase your confidence and leave a lasting impact on the investor. The mention of your past results would build an air of faith, increasing your chances of getting a fund to improve your venture. Let’s be honest! Everyone is in it for the money.
If you can show them that you have what it takes to make a business flourish, they would automatically trust you with their money.
Pitch Your Idea While Networking
Known as a “soft sell,” you could pitch your idea online to any potential investors. Such a pitch is always a great idea because it is not intrusive but gets the idea across conveniently. For this purpose, the social media marketing of your business must be immaculate. The picture you present of your business online is what the potential investors have to judge you on. Any lacking in this department may hinder your path in getting them on your side. If your business catches their eye, there is a chance that a proposal would get you the investment of your dreams.
Sound Confident
If you sound unsure about the pitch you are presenting, even for a second, a potential investor would not even think twice about the offer you are making. It’s natural to get jittery in such a situation, but you must put your best foot forward and present your pitch. If you have confidence in yourself, your investors will have confidence in you. The best tip in such a situation is to rehearse the pitch a few times, which would help you sound confident.
Make sure to add only the essential bits so their attention remains glued to the words coming out of your mouth.
Ask For Their Help
Rather than approaching a potential investor directly, take a more calculated route which may increase your chances of getting the fund. Understand their area of expertise and ask them for their guidance to get your business on a better track; this may work as a way to get the investor interested in your venture. If they take out the time to guide you, there is a high chance they will take out that money too. Such a technique would work great for you as it would allow you to pitch the plan without making it too obvious. It would also give the investor a chance to analyze the opportunities that your business may have. Getting an investment may not always be easy, but it indeed is crucial for the business. Be confident, know what your company stands for, realize why you need an investment, and convey your idea to potential investors. Ensure that your pitch makes you stand out in the room, which will get you to catch the eye of those investors. Now get out there and get your investment!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.
If you have recently been in action with the IRS, you may want to read about Partial Pay Installment Agreements and Offer in Compromise. These are two payment plans for the people who are under the radar of the IRS.
IRS is the Internal Revenue Service. It is a wing of the United States federal government that deals with the taxation department. The IRS is known for being adamant about the payments that business owners might owe them. If you have recently fallen under the radar of the IRS, ensure that you pay the dues promptly. There are two plans for people who would like some ease in the payments.
Please read below to understand which one would be the best possible option for you, considering your financial health.
Partial Pay Installment Agreements (PPIA)
A Partial Pay Installment Agreement is an agreement between the IRS and the business owner. In such a situation, the business owner makes monthly payments to the IRS to fulfill the payment plan as soon as possible. Despite being a complex deal to strike, a PPIA is an excellent plan for business owners who struggle to collect all the funds required to clear their dues.
The ease that the government provides in this situation is removing all the levies imposed on the organization to easily make the rest of the payments. The levies include all those placed on an individual’s bank accounts and properties. Garnering such a deal is considered impossible, which is why someone who finds themselves in a sticky situation should always try to get a lawyer to deal with the IRS. If they are interested in striking this deal, they would be able to.
Keep in mind that once you agree to a PPIA with the IRS, you practically allow the IRS to peep into your financial records every two years. The IRS snooping around is something that many business owners do not appreciate, which is why they often end up going for Offer in Comprise. Unaware of what that is? Continue reading.
Offer in Compromise (OIC)
An Offer in Compromise is an arrangement between the taxpayer and the IRS. When the taxpayer cannot pay off the debt, the IRS intervenes to develop a number that it thinks would be the most reasonable amount to acquire while keeping the statute of limitations in mind.
OIC’s often happen when the IRS is unsure whether the taxpayer would ever pay the total amount, which is why the IRS compromises on a comparatively lesser amount that they think would be paid by the taxpayer. People who often accept this deal believe it as compensation since they get to spend a lesser amount.
Working out such an agreement is always a great idea and is appreciated both by the taxpayer and the IRS. It is obvious why the debtor would think of this as a great idea. The IRS supports such a deal because it feels like this is a fresh start for the debtor. Letting them off at a significantly lesser payment package seems like a great idea, especially if the taxpayer struggles to make ends meet.
Payment Plan Installation Agreement (PPIA) or Offer in Compromise (OIC)?
Both the plans are brilliant ways out for those who are stuck in the business of unpaid taxes. The IRS has always struck up ways to ease people’s lives while ensuring they receive all the due payments.
A Payment Plan Installation Agreement (PPIA) is an excellent option for those looking for dividend payments. They would pay the total amount but in monthly installations. Monthly installations ease out the entire payment process for them. But those who do not wish to have the IRS peeking into their financial records every two years should not opt for this plan.
Offer in Compromise (OIC) is a comparatively more convenient option, although businesses must pay upfront, allowing you to pay a lesser amount and get done with the entire process.
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.
Common Loan Application Denial Reasons and How to Avoid Them
Loan application denial reasons typically include insufficient collateral, poor credit history, high debt-to-income ratio, incomplete documentation, unverifiable information, insufficient income, and unstable employment history. Understanding these specific factors allows you to address weaknesses in your financial profile before applying, dramatically increasing your approval odds. Nearly half of all loan applicants face rejection, but each denial provides a clear roadmap for improvement when you know how to read the signals.
I’ve spent over 20 years as CEO of Complete Controller working with businesses across every sector imaginable, and I’ve witnessed firsthand how the right financial preparation transforms loan denials into approvals. Through our cloud-based bookkeeping services, we’ve helped thousands of entrepreneurs organize their finances, fix credit issues, and secure the funding they need to grow. In this guide, I’ll share the exact strategies our most successful clients use to overcome common denial reasons and get the capital they deserve—including a real case study of a father who turned his mortgage rejection into a financial comeback story.
What are the most common loan application denial reasons?
The most frequent denial reasons are insufficient collateral, poor credit history, high debt-to-income ratio, incomplete documents, unverifiable information, insufficient income or cash flow, and unstable employment.
Poor credit history reflects past payment problems and shows lenders you might struggle with future payments.
High debt-to-income ratio signals you’re already stretched thin financially and adding more debt could overwhelm your budget.
Incomplete documentation or unverifiable information creates doubt about your true financial situation.
Insufficient income or unstable employment suggests you may not maintain consistent payments throughout the loan term.
Reasons for Loan Application Denial: A Breakdown
According to Bankrate’s 2025 Credit Denials Survey, 48% of Americans who applied for loans in the past year faced rejection. This coin-flip probability affects younger borrowers disproportionately—65% of Gen Z applicants and 59% of millennials were denied, compared to just 30% of baby boomers.
Loan application rejection factors vary by loan type and lender requirements. Mortgage applications fail most often due to debt-to-income issues and documentation problems. Personal loans typically get denied for credit score deficiencies and income verification challenges. Business loans face additional scrutiny around cash flow statements and tax returns.
Auto loans: Credit score below 600, insufficient down payment
Personal loans: Recent bankruptcy, collections accounts
Business loans: Inadequate business plan, poor revenue history
Small business owners and individual borrowers face unique loan approval challenges. Many lack the sophisticated financial documentation larger companies maintain. Self-employed individuals struggle to prove consistent income without traditional pay stubs. First-time borrowers have no established lending relationships to leverage.
The Role of Credit Score and History in Loan Denial
Your credit score acts as a financial report card that lenders scrutinize before approving any loan. While consumer credit quality has improved significantly since the 2008 financial crisis—with 60% of Americans now having scores above 661 compared to just 52% in 2008—lenders have simultaneously tightened their standards.
Credit scores below 620 typically trigger automatic denials for conventional mortgages. Personal loan lenders often set minimums at 580-600. Auto lenders may work with scores as low as 500 but charge substantially higher interest rates. Each late payment can drop your score 60-110 points, creating a cascade effect that takes months to recover from.
Steps to improve your credit profile
Pull your credit reports from all three bureaus annually
Dispute any errors immediately—even small mistakes hurt
Pay down credit cards to below 30% utilization
Keep old accounts open to maintain credit history length
Set up automatic payments to prevent future late marks
The impact extends beyond just the numbers. Lenders examine the stories behind your credit history. Multiple recent inquiries suggest financial desperation. Maxed-out credit cards indicate poor money management. Collections accounts raise red flags about your commitment to obligations.
Debt-to-Income Ratio and Income Stability: What Lenders Want
Among mortgage denials, 48% stem from excessive debt-to-income ratios according to the National Association of REALTORS®. This single factor outweighs all others—even credit scores only account for 21% of mortgage rejections.
Lenders calculate DTI by dividing your total monthly debt payments by gross monthly income. Most prefer ratios below 43% for mortgages, though some government-backed loans allow up to 50%. Personal loans often require ratios under 40%. The calculation includes all recurring debts: mortgages, car loans, student loans, credit card minimums, and court-ordered payments.
Income stability requirements vary by lender
Traditional employment: 2 years in same field minimum
Self-employment: 2 years of tax returns showing profit
Contract work: 12-24 months of consistent contracts
Side income: Must document for 2+ years to count
Reducing your DTI requires either increasing income or decreasing debt. Paying off a car loan might drop your ratio by 5-10 percentage points. Adding a part-time job earning $1,000 monthly could improve your ratio by 3-7 points. Even small improvements can push you over the approval threshold.
Incomplete Applications and Unverifiable Information: Avoid Quick Pitfalls
More than one in five loan rejections result from incomplete credit applications or unverifiable data. Yet only 10% of denied borrowers request detailed explanations from lenders—missing crucial feedback that could guide their next attempt.
Missing documents create immediate red flags for underwriters. A single missing bank statement suggests you’re hiding something. Gaps in employment history require written explanations. Undisclosed debts discovered during verification can torpedo an otherwise strong application.
Essential financial documents for loan approval
Tax returns: Last 2-3 years for all borrowers
Bank statements: 2-6 months for all accounts
Pay stubs: Most recent 30-60 days
Investment statements: Current balances and account history
Understanding loan rejection letters provides your improvement roadmap. Federal regulations require lenders to specify exact denial reasons. “Insufficient credit references” means you need more credit accounts or longer history. “Excessive obligations” points to DTI problems. “Insufficient collateral” indicates your down payment or asset base needs strengthening.
Real-World Case Study: Turning Denial into Approval
Brandon N., an inventory control specialist and father from North Carolina, faced mortgage denial due to overwhelming debt and damaged credit. His $32,532 in various debts created unmanageable monthly payments that destroyed his debt-to-income ratio.
Instead of giving up, Brandon enrolled in a debt relief program through Beyond Finance. The program consolidated his debts and reduced his monthly payments by 62%—saving $776.20 each month. This freed cash flow went directly toward accelerating debt payoff and rebuilding credit.
Brandon’s systematic approach included:
Documenting all debts and creating a payoff timeline
Negotiating with creditors for reduced settlements
Redirecting saved money to emergency funds
Monitoring credit reports monthly for improvements
Maintaining perfect payment history going forward
Six months later, Brandon’s credit score had increased 75 points. His DTI dropped from 58% to 34%. While still working through the program, he’s positioned for mortgage approval once he graduates debt-free. His story proves that strategic action after denial creates better outcomes than simply reapplying blindly.
Pro Tips to Avoid Loan Denial: Insights from Complete Controller
After guiding thousands of clients through loan processes, I’ve identified patterns that separate approvals from denials. Success comes from preparation, transparency, and strategic timing.
Schedule a pre-application meeting with potential lenders. Many offer free consultations where loan officers review your situation informally. They’ll identify likely denial reasons before you waste a hard credit inquiry on a formal application. This intelligence helps you fix problems proactively.
Build financial buffers before applying. Pay all bills early for six months—even one late payment during underwriting can trigger denial. Maintain checking account balances above $5,000 to show stability. Keep creditcard utilization below 10% for three months before applying.
Apply early in the month when lenders have fresh quotas
Avoid major purchases 6 months before applications
Wait 3-6 months between applications to prevent inquiry damage
Time applications after annual bonuses or tax refunds boost assets
Shop intelligently across multiple lenders. Online marketplaces let you compare real offers with single credit pulls. Credit unions often have more flexible standards than big banks. Portfolio lenders who keep loans in-house can make exceptions algorithmic lenders cannot.
Financial Documents and Transparency: Your Approval Foundation
Complete financial transparency transforms borderline applications into approvals. Lenders fear surprises more than known challenges. Disclosing a past bankruptcy upfront allows underwriters to work with you. Hiding it until discovery guarantees denial.
Organize documents systematically before starting applications. Create digital folders for each category. Name files clearly: “2023TaxReturnJohnSmith.pdf” not “Scanner0439.pdf”. Include cover sheets explaining any unusual items. If you received a large gift for down payment, include the gift letter immediately.
Document preparation checklist
Tax returns with all schedules (2-3 years)
Bank statements for all accounts (6 months)
Investment account statements (current quarter)
Pay stubs showing year-to-date earnings
Employment verification letters
Explanation letters for credit issues
Proof of additional income sources
Divorce decrees or child support orders
Bankruptcy discharge papers if applicable
Professional bookkeeping services streamline this process dramatically. At Complete Controller, we maintain client documents in organized, lender-ready formats. Our systems track income and expenses meticulously, making verification simple. Clean books often make the difference between approval and denial for business loans especially.
Final Thoughts
Loan application denial reasons follow predictable patterns that you can address systematically. Nearly half of all applicants face rejection, but those who understand why denials happen position themselves for future success. Each rejection letter provides specific feedback for improvement.
Focus first on your debt-to-income ratio—it’s the leading denial cause for mortgages. Document everything meticulously. Request detailed feedback after any denial. Build your credit systematically over months, not days. Most importantly, view denial as data, not defeat.
Your next loan application can succeed where the last one failed. The key lies in addressing specific weaknesses lenders identified. Ready to organize your finances for loan success? Contact the experts at Complete Controller for professional guidance on building a lender-ready financial profile.
Frequently Asked Questions About Loan Application Denial Reasons
Why was my loan application denied even though I have good income?
High income alone doesn’t guarantee approval. Lenders evaluate your debt-to-income ratio, credit history, employment stability, and documentation completeness. You might earn well but carry too much existing debt, have recent late payments, or lack required documentation.
How long should I wait before reapplying after a loan denial?
Wait at least 3-6 months before reapplying, using this time to address the specific denial reasons. Fix credit issues, pay down debts, stabilize employment, or gather missing documents. Reapplying too quickly without changes wastes credit inquiries.
Can I get approved somewhere else if one lender denied me?
Yes, different lenders have varying approval criteria. Credit unions often have more flexible standards than large banks. Online lenders might approve borrowers traditional banks reject. However, address the original denial reasons first for better outcomes.
Will shopping around for loans hurt my credit score?
Multiple loan inquiries within 14-45 days typically count as single inquiry for credit scoring. This “rate shopping” window lets you compare offers without excessive credit damage. Space applications outside this window to avoid multiple hard pulls.
What’s the fastest way to improve my chances after denial?
Pay down credit cards for immediate DTI and credit utilization improvements. Correcting credit report errors can boost scores within 30 days. Gathering missing documentation takes just hours but solves many denial reasons instantly.
Beyond Finance Blog. (May 2025). “Client Exclusive: How We Helped Brandon N. Recover From Debt When a Mortgage Denial Became a Reality Check.” www.beyondfinance.com/blog/
Federal Reserve Bank of Minneapolis. (2024). “Lender-reported reasons for mortgage denials don’t explain racial disparities.” www.minneapolisfed.org
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.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
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.
