When you’re a business owner, you have to be prepared for anything. You might think your idea is perfect and that no one else could do what you’re doing. Unfortunately, the truth is that there are many other people like you on the market — some probably even better than you! And then there’s the fact that making business money isn’t easy. If it were, everyone would be doing it! That said, here are four reasons why your loan application might not have worked out as planned:
If your business needs money but doesn’t have a good credit score, it may be time to reconsider your options. A good credit score is necessary for most business loans and financing plans. If you do not have a solid FICO score, other options are available for businesses with less than stellar financial backgrounds. The experts at Lantern by SoFi recommend, “Business owners with low credit may consider a short-term business loan or line of credit to finance a purchase or fill in gaps in cash flow or inventory.”
Though the process is more complicated for a small business loan, the time it takes to get approved and funded will vary depending on your bank’s criteria. For example, if you’re looking for a business line of credit from your bank, the process may take anywhere from 30 days to several months. If you’re applying for an SBA loan, keep in mind that this type of financing can take up to one year or longer due to the extensive paperwork involved.
A collateralized loan has a property used as collateral. Collateral can be tangible, such as real estate or an automobile, or intangible, like a business you own. If you do not have any collateral to put up for the loan, then your interest rate will probably be higher than that of someone who does. This is because there is no guarantee that you will pay back the money if something happens and you cannot repay them.
Cash flow is the amount of money a business has to pay its expenses. Cash flow can be negative if you have too many expenses and insufficient income, so it’s important to monitor your cash flow every month. Many business owners don’t realize they have a negative cash flow until they apply for a loan and get denied, so it’s important to keep an eye on this one before applying for one in the first place!
If you’ve been rejected for a business loan, don’t let it get you down. While it may feel like the end of the world, there are plenty of other options for getting small business loans online that can help you get your business off the ground. Remember, it’s not personal! Your lender doesn’t think their program is right for your needs or circumstances. So don’t give up—keep looking until you find something that meets all your needs and goals without causing undue stress on yourself or family members who depend on your income for survival.