- 8 Reasons Your Business Loan Is Getting Rejected
Obtaining a small business loan can be a headache and in some cases a painful process. This is true for company owners seeking a business loan for the first time. Today, many finance options are available for business owners than weren’t previously available. Lenders are now offering a host of loan options from Equipment Finance to Small Business Revenue Loans. Some businesses owners apply for personal finance due to a low credit score. According to a 2016 New York Fed SBCS(Small Business Credit Survey) report 42% small businesses rely solely on the owners personal credit to secure debt. Most debt is secured by a by a personal guarantee which holds the owner responsible for the debts of the business.
On to the 8 reasons your business loan was rejected
1. Your not sure how to calculate your FICO credit score
Nearly half of all small businesses weren’t aware they had a business credit score. Nearly 80% of business owners admit they don’t know how to calculate a business credit rating. Bad or no credit can have negative effects on the business credit report. An advantage of building business credit is that the owner doesn’t have to risk personal assets. You can access your score through credit reporting agencies, such as: Experian, Equifax and FICO.com. After checking your score you can elect to build or repair your credit. While the credit is being repaired try not to take on any new debt and try to keep timely payments on open accounts.
2. Insufficient Cash Flow
Lenders pay special attention to how their clients will pay back the loan on top of covering other expenses, such as payroll, inventory and other expenses. If you have more cash going out than in, your operating