Maricor Bunal
Getting declined for a business loan can easily be considered one of the first hurdles an entrepreneur needs to overcome during the initial phase of starting a business. But as success means one has to take another step forward, it’s a must for business owners to find ways to overcome the rejection and get going. For starters, one should know the rationale for the lender’s decision. Based on studies and entrepreneurs’ first-hand experience, the following are the four common reasons loan applications got rejected:
- Lacks of insufficient collateral – The providers consider the value of assets insufficient in paying off the loan, should the borrower fail to repay within the set deadline.
- Weak business plan – The borrower failed to come up with a winning business plan.
- Not-so-promising financial projections – The bank consider the borrower’s business numbers and income insufficient in paying off the loan.
- Back credit history or inability to present a good credit records – The applicant wasn’t able to his or her credibility as a responsible borrower or has no records to show that he or she is.
4 WAYS TO HOW TO GET OVER THE REJECTION
To ensure you’ll get approved the next time you apply for a loan, here’s a list of what to do even before finding your next prospect provider.
Ask for Feedback
Don’t hesitate to ask feedback from the provider on why you got declined. This is how learning takes place and this helps you plan your next move. For instance, if it’s something about availability of a suitable loan type, proceed to tip number 2. Or if they think your business plan isn’t convincing enough, you should focus on tip number 3. Or worse still, focus on tip number 4 if they think you’re not doing well with your credit history.
Consult Experts for Help
Contact our loan consultants here at Loansolutions PH to help you explore your business loan options. We can help you compare the interest rates of banks and private lenders, looking into important aspects such as interest rate, tenor, payment options and collateral requirements. There are a lot of other financing alternatives out there (e.g., project-based funding, crowd-funding, merchant credit lines) and we can assist you in getting one of these.
Spend a More Time Streamlining your Business Plan and Financial Projections
Banks and private lenders usually decline applicants whose business figures don’t look promising. So make sure yours is lucrative and realistic. Show them positive numbers in your cash flow, passive income sources and the value of the assets you currently have.
Settle Any Negative Credit Record with Your Existing Lender
Negotiate with your existing lenders regarding the tenure of your credit. Or better yet, pay off your existing outstanding balances before getting a new one.
If you’ve been declined for a business loan, just remember that it’s not the end of it. There are other providers out there who are willing to lend money depending on your capacity to pay. Just contact Loansolutions.ph financial consultants to assist you in finding the right provider and facilitate your application.
