Merchants might need funding for many reasons, and if you’re running a business, you’ll likely find yourself looking for extra cash from time to time. Depending on the type of your operation, getting the finances you require can be easy, a little challenging or near-impossible.
Nevertheless, having prior information of what your prospective funding partner looks for in an applicant will help you know what it takes to get your request approved.
Below are some of the most common reasons why a financier might reject your application for funding, and how you can avoid them.
- Inaccurate or incomplete business information
While it might seem like a no-brainer, many merchants lose out on funding because of insufficiently or inaccurately filled application forms.
Financial solutions providers will demand information like credit history and recent revenue, and to get approved, the data you submit should be complete and valid to the best of your knowledge. Even a small discrepancy such as the omission of one of the business owners’ name can be enough reason for the provider to decline your application
- Risky business
High-risk merchants find it difficult to access funding solutions. Lending institutions are often reluctant to give their money to a company with a higher likelihood of failure.
If for example, you run a pharmaceutical retailing operation, a change in regulations or a product’s ban can be catastrophic and the debts owed to a lender will likely remain unpaid. To protect themselves, many banks choose to dismiss high-risk enterprises.
Consider changing to a lower risk operation, if your business plan is flexible. Otherwise, instead of wasting your time with traditional lenders, sign up for funding from a high-risk specialist. You will stand a higher chance of getting a cash advance from a firm like First American Merchant, than a bank loan.
- Bad credit
A merchant with a history of not paying debts on time will have a slimmer chance of getting funded. A provider will want to know you’re capable of meeting the requirements stipulated in the loan or cash advance agreement, and one way to do so is to check your credit score.
To increase your chances of approval, ensure you maintain good credit practices by only borrowing when you need to, and spending business funds wisely.