3 reasons your application for a small business loan was rejected
After seeking out small business financing, you’re disappointed to find out that your application for a small business loan was rejected. At Fora Financial, we know that many business owners need additional funds to sustain their growing businesses. Whether your business requires extra cash flow, or could use funds for something specific like expanding your space or purchasing new equipment, small business funding can help your business succeed.
Don’t let the rejection get you down, and instead get ahead by learning how you can receive funding the next time you apply. If your application for a business loan was denied, check out these three reasons that could’ve scared away the lender.
1. Be patient – Many lenders require that the companies they provide funding to be in business for a certain length of time. Luckily, this is an easy problem to fix. Simply wait until your business has been up and running for the required amount of time and re-apply. Ask the lender if this was the only reason that your business wasn’t funded. If this was why your small business loan was rejected, you’ll be receiving a loan or cash advance in no time.
2. Stay positive – The biggest warning sign for a lender is seeing that your business bank account has numerous negative days each month. A negative day refers to when your business bank account is overdrawn, resulting in a negative amount of money in the account. Does your business have more than a couple negative days during each month? The lender was probably alarmed by this, since you wouldn’t have the money in your account to pay them back, which could create problems for you both. If your business loan was denied, try to improve this aspect of your company’s finances before re-applying. To do this, try to keep a certain amount of money in your bank account as a cushion to avoid this in the future.
3. Make more money, simple as that– Some lenders will want to ensure that your business meets a minimum gross sales requirement. Unfortunately, if your business doesn’t produce the required amount, this could be why your business loan was rejected. Make it a goal to reach the lender’s gross sales amount, and re-apply once you’ve succeeded.
Just because your small business loan was rejected the first time you applied doesn’t mean you won’t receive financing in the future. Reach out to the lending company you applied with and find out if they can give you any insight on what to do going forward. If you are able to identify why your business loan was denied then you can work on improving your business and re-applying. In the meantime, see if you can get financial support from family and friends until you get approval from a lender. Good luck!