Typically, you’ll start your search with a bank loan if you need a business loan. When you discover that the banks aren’t willing to grant you a loan, you may then shift towards the Internet search. Also, it’s commonly seen that alternative lenders turn down applications and often this might be because you weren’t sincere with the lender from the beginning.
Optimistically, now lenders have started to relax the standards with regard to the following:
- The credit score
- Cash flow needs
- The length of the time the business has been operational
It’s imperative to know this so that you’ll know how business lenders view your loan application.
3 Major Factors Lenders Will Reject Your Business Loan Application
- Lack of Income Proof
If you require a loan, probabilities are that your first payment will be due approximately 30 days to 45 days after you’ve been granted the funds. If you’re unable to prove that you make adequate money to repay the loan, chances are high that you’ll be denied a loan. What lenders want to see is that you’re capable of making monthly payments. This means you’re proving to them you have the income to accomplish this.
2. New Company [i.e. Start-Up]
Numerous small business owners give up in the first two years of their business. And many don’t make it even after five years, which is even bad. Thus, a big chunk of lenders won’t sanction a loan for business owners that don’t have an established trading record. However, you can get a higher chance of approval of cash fast loan from money lender if you have assets, which you can put toward the loan as a security. Keep in mind that the rate of interest would be considerably higher in such type of asset-based loans. So the favourable thing you can do is to request for a personal loan to get you moving. If you’re rejected for that, you may want to ask your family, relatives and close friends to help you.
- Bad Business Credit Score
You might be thinking that your business credit score is the most vital factor in deciding if you’ll be sanctioned a small business loan; and that, why is it so? Your previous borrowing and repayment behaviour is a display of your credit score. If there are any red flags in your credit score, it indicates that you have not fully paid those particular loans. This is a critical factor that often other lenders consider for approving or rejecting your credit. Lenders may observe some of your circumstances wherein you haven’t fully repaid your loan and they may want to know the reason for it. Banks won’t be carried away by your “sympathetic stories”. Nonetheless, alternatives to banks tend to be more approachable if you can show them you have assets and a decent cash flow that will increase your security risk.
What Can You Do If You Are Denied A Loan?
If you’re worried about whether you’ll be eligible for a business loan or if you’ve been denied a business loan in the past, it is imperative that you get access to the right assistance.
The Option of Pawn Loans – Same Day Business Loans
You can avail a short term business loan from a pawnbroker and moneylender on the same day. All you need is a valuable asset like a car or a motorcycle or a boat etc. A pawnbroker can even provide you with bad credit loans in Sydney. So you’ll get same day business pawn loans without any credit checks or background checks because your credit here is your asset.