Dealing with rejection is hard, especially for an entrepreneur who believes in their services or products. But being rejected for a small business loan, may not have anything to do with the viability of your product or service. There are a variety of reasons that responsible business owners are rejected by traditional lenders. Common reasons include: bad credit, little to no credit history, bankruptcies, tax liens and more. If you have been denied for a small business loan, there is still hope. The following are a few tips on what to do next after being declined for a small business loan.
Know What Is on Your Business’ Credit Report
Get your credit score at Equifax, Dun & Bradstreet, or Experian. Many people don’t know that there is a difference between business and personal credit scores. One of the most notable differences being that individuals must pay for business credit scores. Make sure there are no mistakes. Individuals who fix errors on their credit report, often see a score increase of 25 points. Pay attention to your credit utilization. Do you have diversified sources of credit? Are your credit card balances between 10 and 20 percent of your credit limits? Are you making payments on time?
Ask for Feedback
If you are rejected, talk to the loan officer about the reasons why. Was your business credit score too low? Did you not have enough business experience? Was your business plan deficient? This is a vital step that too many business owners skip that can help you modify your business plan for better success in the future.
Look for Alternative Sources of Funding
Today there are a multitude of alternative lenders that do not weigh credit as heavily as traditional lenders. In fact, many online lenders specialize in giving loans to small business owners with bad credit.
If your small business has bad credit and needs funding for start-up costs, contact FAM. We specialize in giving merchant loans for start-up companies. FAM is an online merchant cash advance organization that will help you reach your financial goals through competitive rates and short term loans. FAM can and will give advances to merchants with little credit or bad credit. Start your application today.Get Started Now