You’ve assembled all your business and financial information, submitted it to a lender, and crossed your fingers for luck. And … no dice. Your application’s rejected. How are you supposed to grow your business now?
Pick your head up! You’re not out of options just because one lender rejected your application. Try these steps to get back in the game.
1. Get answers.
Reach out to the lender and ask for details. You’re not trying to get them to reconsider your application. You’re just asking for the specific reasons why it was rejected. Once you’re armed with this information, you can figure out how to improve your application package—or how to find a lender who appreciates your business a little more.
2. Dig into your business records.
How closely are you monitoring the pulse of your business? NASDAQ and Value Penguin point out that two of the most common reasons for loan rejections are poor cash flow, and insufficient income. If you have trouble making ends meet, build a budget to help you get through the lean times. And if your revenue or profits are low, focus on bumping up your sales and refining your pricing. You may find the market will actually bear a higher rate for your services or products.
3. Look hard at your credit.
Lenders commonly use your personal finances as a gauge of your business responsibility, so make a serious effort to pay off debts and address past concerns. While you’re at it, learn everything you can about your business credit. In a CBS News story, the CEO of reporting agency Dun & Bradstreet explained that his company often hears from small business owners after they have a loan application rejected. He suggested that owners build familiarity with their business credit report, giving it the same attention as their personal credit.
4. Try a different lending model.
When you approach a specific lender, you take on the responsibility of knowing all of their criteria. You also take on the risk that your business, finances, or reason for the loan won’t meet the lender’s strategic needs. By applying through a funding marketplace like Lendio, you gain access to a variety of lenders with different criteria and interests using a single application process. Our dedicated specialists even work with you to find a solution that may help you achieve your goals.