If you are dreaming of starting a small business in Ogden, you are aware that you need sufficient capital to handle the daily operation and take care of business emergencies. Aside from your grand business plan, you need a lender who will trust and help you build your business dreams.
Many financial services providers offer various types of credit, ranging from small business loans to down payment assistance. But not all of them will answer your request with a resounding yes. What if the first lender said no? While a negative answer is discouraging, a rejection shouldn’t stop you from realizing your vision. Here are a few things that you can do instead of dwelling on your frustration:
Know the reason behind the rejection
Banks and private lenders are working in a risk-reward business. To lessen the risk, each lender sets specific requirements like collateral, length of operation, consistent cash flow, personal guarantees, debt-to-income ratio, industry health, and credit score. While you cannot change the lender’s decision once you got the red stamp of denial, you can ask them why your application did not meet their requirements. Knowing the reason why your application was rejected will not only quench your curiosity, but it will allow you to make necessary adjustments before your second go-around.
Apply for alternative loan products.
Different loan products have different requirements. If a lender denies you on one application, it doesn’t mean that they will say no all the time. Chances are, you might qualify for a different loan product without making significant changes to your business finances.
Check your credit score
One of the main reasons for loan rejections is your credit score. Lenders require a magic number before you can convince them that you can afford repayments. If your score is not so impressive, the lender will assume that you can not manage your personal credit. And they will doubt your ability to pay back a business loan.
Believe that rejection is a redirection
You might feel miserable when you get the rejection notice, but you don’t have to focus on the pain. Being rejected doesn’t mean your business will remain a fantasy forever. Rejection might delay the process of putting up your business, but it redirects you to something better. It’s a learning experience that allows you to improve your shortcomings and correct your mistakes.
If the rejection is because of simple documentary mistakes, revise your application and give it another try. You might also need to improve your budget plan, offer more valuable collateral, or seek alternative funding.
Be extra careful when reapplying
Aside from a bad credit score, simple oversights to your application loan or choosing the wrong loan product could be the reasons you were rejected. Practice utmost caution the next time you file your application. Make sure that you have complete documents and provide accurate and honest information if you don’t want to be heartbroken the second time around.
Do not let a single rejection end your business financing journey. Remember that you can always try again.