There probably is no person on this planet that enjoys rejection. No matter what form of rejection, whether it be a “no” from your dream job, the person that you are in love with, or the bank regarding a loan application, it cuts you to the core.
If you are a small business owner, then you have probably received one or more of these rejections from a lender. In the first half of 2014, out of all of the small businesses that applied for financing, only half received the financial assistance for small business that they were looking for.
Fortunately, Fast and Easy Funds has a fast application and approval process for working capital that allows for the majority of applying companies to obtain help, allowing businesses to grow and succeed. At Fast and Easy Funds, we realize that many institutions do not approve loan proposals and we hope to answer the question as to why so many business owners are denied for small business loans.
– Bad or no credit at all. Banks will generally look at both a personal credit score and a business’ credit score to decide if they will lend to them and determine interest rates. The most common reason businesses get turned down for loans is having no or low credit history.
– Weak cash flow or the inability to prove cash flow. Lenders want to see that a business will have enough income to make their monthly payments after covering all of the business’ expenses.
– Poor planning and preparation. Many small companies get turned down for loans simply because the owners are not prepared. Some businesses are just not savvy when it comes to the application process, hindering them in the end.
– They are lacking collateral. Lenders will often require collateral before they can agree to lend. New businesses may not have acquired any significant collateral yet and are unwilling to use personal property.
– Banks want to avoid the risk of lending to small businesses. Since the financial crisis of 2008, many banks had to raise their lending standards in order to avoid taking on too much risk. Lending to a small business is risky for a bank.