A business cannot start without the flow of cash. But to keep the cash flowing is no less than a task. The first thing that pops into the mind to arrange for the capital is taking a loan of course. But getting a bank loan is not a piece of cake. Banks d not chuck out loans just like that. Thinking from the lender’s perspective might give you answer why.
While a lot of loan pleas are rejected but the worse thing is that most of the time the banks don’t even tell the reason. Fortunately you are at the right place. Here are top 10 reasons why you loan might have been rejected.
Unaware of a credit score
Failure to understand one’s own credit score has to led to more than one loan plea rejection. In case of credit scores, understanding is the second part first comes the awareness of its existence. Most people don’t what a credit score is, what their score, where to get this information from or how it helps in matters of money lending.
What a lender expects is the prompt and regular return of the money lent. After deducting all other expenses if you do not seem to be able to repay the loan back in time then you probably won’t get one. Keep your record of finances neat and clean, devoid of all unnecessary expenses. Don’t get demoralised as there are people out there ready to fund new ideas. Also there are other options like online lending, crowdfunding which you can use to get your needs settled.
Lending money is a risky affair and hence banks ensure ways of reimbursement for security. Include your business and personal assets too because it is not necessary that your business may have a real estate or equipment to offer.
New comer in the business world
It is always more difficult in the beginning because lenders do not trust easily. They expect a healthy record of revenue which is not possible when one is just starting out.
Having other loans
You need to have a clean financial without any backlogs or unpaid loans while applying for a fresh loan. Don’t take unnecessary loans.
Poor business plan
There are people interested to fund in new possibilities but your business plan also needs to be sound, convincing enough that it will generate the estimated revenue and run smoothly.
Reason for taking a loan not convincing enough
There is tough competition in the lending market out there. To grab one you need to look deserving enough.
Misunderstood credit score
Once you know that you have a bad or no credit score at all, then you can improve it and chuck out the negative score.
Proper documentation is a must to get a loan. This problem won’t arise in case of businessmen but in case of the poor and underprivileged.
Apart from mistakes on your end, at times a loan may get rejected because of outside market’s risky state of condition.