One of the toughest parts of running a business is not being able to get financing at the time you need it the most. Thousands of small businesses get turned down for loans every year, and for some, it will be the reason why they’ll have to close their doors. If you’ve been rejected lately, you shouldn’t despair. There may be things you could do to either make yourself a better candidate or find someone who’ll be ready to accommodate you. Here are some of the things that you can do if you can’t get a business loan.
Ask for an Explanation
The first thing you should do after getting turned down is ask for an explanation. Some business owners will automatically give up, but the reason you’ve been denied a loan might be relatively easy to fix later down the road. Once you know the exact reason, you will be able to come up with a plan and come back with more confidence.
Get Your Credit in Order
If you find out that poor credit was the issue, you’ll need to take the steps necessary to fix it. You will need to work on both your personal and business credit. Get your DUNS number if you haven’t already and start opening accounts with as many suppliers as you can. Make sure that they report activity to Dun & Bradstreet and that you treat these accounts like gold.
You will also need to review your personal credit report and make corrections if you see mistakes. If you see legitimate entries, get in contact with the account provider and see if you can work out a deal to repay and get the entry deleted. This agreement has to be in writing. Next, consider getting a secured credit card and paying the balance in full each month. As you rebuild your credit, open as many accounts as you can confidently handle and use them responsibly.
Look for Alternative Lenders
If you’ve been turned down by a bank, you should consider looking at alternative lenders. Banks are not very fond of small businesses, and some will refuse to lend money to you on those grounds.
Many lenders will look way beyond your credit score to assess your ability to repay a loan. AdvancePoint Capital offers fast business loans and will not only look at your personal and business credit score, but the general health of your business as well. This could be the only solution if you just got started and didn’t have the time to build a solid credit history yet.
Improve Your Cash Flow
You should know, however, that these lenders will want to see your books before extending money to you, so you have to take steps to improve your cash flow. Cut on any existing debt you may have. Take steps to reduce your overheads. Proactively market your business using low costs options. Also, look at where you might be able to trim some fat, whether it’s moving to a more affordable location or letting some people go.
Getting turned down for a business loan is a normal part of doing business. Thankfully, there are plenty of things that you can do to make yourself more attractive to lenders and increase your chances the second time around.
Recommended Resource: Many financial institutions and lenders often want to see a professional business plan before deciding on loan approval. This resource takes a closer look at business planning software which allows entrepreneurs to create professional business plans easily.