Applying for a bank loan or a traditional loan doesn’t guarantee loan approval. Hypothetically stating, your potential lender has rejected your loan application, and now you are drowning in doubt! Don’t consider rejection as a failure; think of it as another opportunity to improve your weaknesses. Most of the startup business owners faced rejection on their first try, but they strived to improve credit score and financial position. The key is to choose the best funding option in compliance with financial needs and business type. The borrowers can take multiple steps to upgrade their financial stance to secure the finest and convenient small business loan.
Get in contact with your potential lender.
As a borrower, your first step should be to get to the bottom of the reason behind loan application rejection. Often times, even after throwing your application in the rejection bin, the lenders are willing to share the details behind their decision. The best way to improve is to look at the whole scenario by standing in the shoes of the lender. A different perspective might aid you in identifying your weak spots.
If the issue revolves around poor credit, then the lender is supposed to give you a ‘notice of adverse action.’ This document will explain how the potential lender has used your history of borrowing money and making repayments before and after the deadline. Moreover, with access to the credit score report you are able to know where you stand, financially. So, what does one do if one has a poor credit score or unbalanced credit sheet? The first step is to devise a plan that will help you as a borrower to improve the credit score. Lenders look for a decent credit score, and achieving that is entirely possible! Apart from having a bad credit score, there are other multiple reasons behind the rejection.
Was your loan application rejected because of unsteady income flow? The lenders offer loan to borrowers showing financial capacity or making repayments on time. With an unsteady or inadequate income, you pose yourself as a risky candidate. Don’t think lenders ask for a steady income because they don’t want you to succeed. It is their company’s policy to check the borrower’s ability to pay off the debt within the scheduled deadline. Other than poor credit and low income, there are numerous other reasons. Thus, it is advised to get in contact with the lender and find out the very reason that has become a hindrance in between funds and your dreams.
Fixing errors and clearing off the pending debt
Now that the reason behind the rejection unveils, it is time for you to fix your error. Often times, a computer makes a numerical error while generating your credit report and a human has to face the consequences. You have a right to review your credit report and eliminate apparent errors. In addition to this, you can improve your credit score by managing your previous debt. Instead of doing it manually, you can do use the digital application; for example, Credit Karma, Credit Sesame, Debt Planner, and various other applications just like these. These apps will help you keep track of all of your bank accounts, payment plans, and will notify regarding the approaching deadlines. In addition to all of these perks, these apps allow you to design a debt timeline.
Get benefit from the free help provided by the apps, eradicate errors, and strike back! Although you must focus on getting a small business loan from a traditional or an alternative lender, it is also necessary to explore alternative options and tips and tricks to achieve the goal.
Embellishments and Alternatives
Apart from having a good credit score, steady income, no outstanding debts, you can improve your chances of approval by adding other credible information in your loan application. For instance, borrowers are not required to offer collateral to qualify for a small business loan. But if you aim to secure a personal loan, offering some sort of collateral will always point in your favor. Exercise caution, before offering your home or car as collateral because failure to make the repayments on time allows the lender to seize your valuable assets. Evaluate your business needs, and if you fear you won’t be able to make the repayment on time, probably exploring other options would be a nice idea.
Want to repair broken equipment or have a need to buy a more advance bulldozer for your construction business? Applying for equipment financing is a wiser option. Here, the chances of loan approval are higher for the purchased equipment will act as collateral itself. Furthermore, improve your chances of approval by getting a co-signer. If a borrower fails to make the payment on time, the lender will chase the borrower and the co-signer, both. So, before getting a close relative to sign the dotted line, make sure they understand the borrowing and lending concept. Inform them about all of the risks!
Keep these facts and hacks in mind before applying for a small business loan for a second time. You are at liberty to choose another lender. Don’t consider rejection as failure, conduct thorough research, explore multiple options, compare APR and interest rates, and pick the most affordable and convenient option.
If you need more information regarding business loan application, head over to our website. For updates, tips, and tricks follow us on Twitter (@Onlinecheck) and Facebook (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer your every question and guide you throughout the way.