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Turned Down For What? Why Your Small Business Loan Application Was Rejected

Rejection hurts, regardless of what it encompasses. For small business owners, rejection can mean disaster if the rejection happens to revolve around a loan application. While small business loans are available, not all small businesses are eligible for small business loans. This can leave merchants scrambling to find funding. While some scramble to find funding in all types of places (parents, rich uncles, title pawn, etc.), the first thing you should do is investigate why your loan application was denied.

Small business loan applications are denied for many reasons. One of the reasons could be that your business is new. Regardless of your personal credit reports and score, a new business will always be considered “high risk” in the processing industry. This is one of the top reasons why business loan applications are denied. Another reason also concern your credit, but on the opposite end of the spectrum. While new businesses can be denied for their lack of credit (even if the merchant has a great FICO score), a merchant with bad credit can also have his or her loan application denied.

Before you apply for a business loan, or even a personal loan, you should take a look at your credit report. While your FICO score is important, the meat of your report is the most important thing to look over, as the information is not always correct. If you do not recognize a creditor, or if something should have fallen off your credit report, you can report it to the “Big Three”: Experion, TransUnion, and EquiFax. One error can deeply effect your score – and your chances of getting a loan – so it is worth taking the time to check over your report.

Even if you have a bad credit score and report, or are in a new business, you can obtain a business loan. While a bad credit business loan may seem like a dream, it is a reality. Reputable and experienced loan providers are available to work with you and your business, and it is up to you to take the plunge. Remember that not all loan providers are created equally, and you should ask questions to find out if the provider is the best fit for you and your business.