5 Reasons For Your Business Loan To Be Rejected: What You Can Do About It

Low CREDIT SCORE or Insufficient COLLATERAL.
Every bank checks how reliable you’re when it comes to paying back. Low CS or no collateral says you’re not trustworthy.

The FIX:
There are more options out there for you than ever before. Try banks that have no such constraints

Low Business Performance with irregular CASH FLOW
If you’re not consistently making profits, that can be a red flag. This says that you’re not managing your business well.

The FIX:
Use accounting software that gives you business reports; then, monitor your cash flow weekly & make informed decisions to stay on top of it.

 

You may want to read these:

5 Good Reasons To Take Out A Business Loan

3 Govt Schemes under which Small Businesses can apply Loan of up to Rs. 2 Cr

Poor documentation of business TRANSACTIONS
78% of business owners maintain accounts on papers that are lost with time. Sadly, most banks ask for organized financial statements of the business.

The FIX:
Start using accounting software to manage your accounts digitally. This way, accessing any business-related details becomes super easy.

 

Business too NEW for loans
When your past performance records say nothing, then getting a loan becomes hard. Build credibility, before applying for a loan.

The FIX:
If you are a first-time business owner, try alternative funding channels such as family & friends, credit cards, and small business loans by the government.

 

PURPOSE of Loan isn’t strong
The bank needs to know where you will invest money on. If you have no strong purpose, they are less likely to process your loan.

The FIX:
Why do you need a loan? Is it for purchasing essential equipment, inventory, or renovating your store? Give a strong purpose for getting a loan.

You may want to read these:

9 Trusted Business Loans for Women Entrepreneurs in India

5 Best Small Business Loans in India to go for

15 Best Small Business Subsidy you should know about.

 

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