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Article from MoneyAhoy.com
8 Reasons Your Business Loan Was Rejected
As a growing business (or if you plan to start your own business), you may need office upgrades, new equipment, or an expansion. These are great for businesses, but they need funding. If you do not have enough funds for these plans, you may need to apply for a business loan. However, applying for a loan is tricky and most banks and lenders reject almost 50% of the loan applications they receive. Why do banks and lenders turn down business loan applications? Here are 8 reasons why business loans are getting rejected:
1) Bad credit score
When applying for a business loan, lenders or banks always evaluate the applicant’s credit history. It is one of the most important factors that can affect your loan’s outcome. If you have an existing or past loans, which you have failed to pay from time to time; or worse, you have defaulted them altogether, chances are, your business loan will get rejected.
Credit card and utility bills also have the same impact on your credit score. Take care of your credit history and maintain a good score by paying your debts and bills and updating them regularly.
2) Cash flow is Insufficient
A business cash flow shows its capacity to repay a loan after the operating expenses are deducted. Lenders want to see if you can secure a monthly loan payment on top of your expenses to pay the rent, maintain the inventory, and provide for the payroll. If these are not met, it only means that your business is spending more than what you earn.
Most lenders are not confid… Read More
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