What To Do When You’ve Been Rejected For A Business Loan

If you’re trying to start up a business, then applying for a loan is a common way to secure the funding that you need to get things rolling. However, when you’re rejected for the money that you need, it can feel like running directly into a dead end. It doesn’t have to be, however. One rejection, or even a handful of rejections, doesn’t have to be the end of your business’s story. There’s a lot that you can do to bounce back and get the funding you need.

Here, we’re going to look at some of the steps you should take if you’ve been rejected from a business loan, improving your application while looking at your other options, too.

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Address Any Credit Score Issues

First of all, you should take a look at why you have been rejected if you have been provided with the reasons. Even if you haven’t, you should start with the credit score, which is certainly the most common culprit behind loan application rejections. Lenders will lean heavily on your credit score as an indicator as to whether or not you are reliable with money and credit agreements. Take steps to improve your credit by paying off any outstanding debts and reducing how much of your credit you use, and look at your credit report to see if there are any black marks that need to be addressed.

Make Sure You Have A Great Business Plan

A strong business plan is a key factor in securing a loan. Lenders want to see that your business is financially viable and has a clear path to success. If your application was denied, it might be time to revisit your business plan and strengthen it. Ensure that your plan includes detailed financial projections, a comprehensive market analysis, and a clear strategy for how you will use the funds. Highlight your business’s potential profitability and demonstrate how the loan will contribute to growth. A well-prepared business plan not only increases your credibility but also reassures lenders that their investment in you is a sound one.

Work With A Broker

If you’re not used to it, the business lending landscape can be complicated and difficult to navigate. You might not be applying to the providers who are best suited to the needs of your business, for one. To that end, you should consider working with an SME loan broker who is not only more likely to understand the specific needs of your business, but also which lenders might be in the best position to offer the help that you need. They can tap into a broad network of funding sources and help you tailor your application to each potential lender that you apply to.

Consider Collateral

Collateral can be an important factor in securing a business loan. Lenders are more likely to approve loans when there is a tangible asset to secure the funding. If you were denied because of a lack of collateral, consider what assets you can offer, such as real estate, equipment, or inventory. Providing collateral reduces the risk for the lender and increases your chances of obtaining a loan. However, keep in mind that offering collateral comes with the risk of losing the asset if you are unable to repay the loan, so carefully assess what you are willing to put on the line.

Look For Different Funding Methods

Applying for a loan from a bank or traditional business lender is one of your options, but it’s far from the only one. If you’ve been rejected, you can look at other providers such as angel investors or venture capitalists. If your project has public interest behind it, then crowdfunding platforms can make good use of that existing excitement. Running a crowdfunding campaign is not easy, but it can be the right approach for some companies that already have an audience excited about their product. Otherwise, online lenders and peer-to-peer lending platforms can offer terms a little more flexible than the traditional lending apparatus.

Don’t Forget Government-Backed Programs

Depending on your location and your industry, there may be government-backed programs and loans that you can take advantage of. These state programs often don’t offer as much in funding as a business loan, but they can include more flexible lending requirements and lower interest rates that can make them a good fit for those with bad credit, for instance.

With the tips above, you can ensure that you’re in the best possible position for getting your business the funding that it needs. From there, all you have to do is make the best use of it.