First of all, don’t get discouraged. Only about 1 in 10 applications for small business loans are approved. It’s incredible (in a bad way) that 9 out of 10 business loan applications are rejected. Absolutely crazy. Why?
Usually a business loan application isn’t made until after a bank “business loan specialist” quizzes the business owner about their qualifications and, presumably, thinks they can get the business owner approved for the loan. The loan specialist isn’t some sadistic jerk who finds devious pleasure in inflicting pain; rather usually one of three problems leads to a rejection:
- 1. The wrong loan product is recommended (BUT there was a different loan product that could have worked!).
2. The loan specialist doesn’t know what the underwriting requirements are.
3. The business owner wasn’t qualified.
By our estimates, of the 9 rejected business owners, roughly half of them are qualified for financing, but they’re at the wrong lender, or they’ve applied for the wrong loan product. The other half are business owners that have work to do before they’re bankable.
So what do you do if you’re rejected?
Keep looking and get your crap together (I wanted to use a different four-letter word but I’m scared of HR). When I say “keep looking” I mean you need to find the right loan and the right lender to extend the approval.
What about getting your sh, er, crap together? Lots of business owners are confident folks. That’s part of the reason they start a business. Sometimes that confidence translates to laziness of credit and qualification hygiene. Most business owners are also salespeople. They think they can slick talk their way around a loan underwriter’s disapproval of their poor credit. They think that with a devilish wink and some nice dance moves they can get out of having legitimate financial projections, or get away with having a shoddy business plan.
Underwriters are paid to find problems, not solutions.
Now for a shameless sales pitch — as one of those overly confident (albeit good intentioned) salesman business owners — the pain I just described is what Lendio solves. Either we match you to the right loan(s) and lender(s) or you’re just not ready for financing, and Lendio can help you get on the right track.
Good luck. Keep up the proud business owner fight. Our economy needs it. We think you’re awesome and love that you’re out there, like us, trying hard to make lives better.