What to do if rejected for a startup business loan
What to do if rejected for a startup business loan
Getting a business loan is usually decided by several key metrics: How long your business has been operating, your credit report (business and personal), your business bank account data, annual turnover, financial history and the strength of your business plan.
However, if you’re seeking funding for a startup loan your business will be very new or may not be trading yet. This means you won’t have much business history and your paperwork may be minimal. In such case, the lender will typically pay more attention to your personal credit score when evaluating your loan application. It is also usual for lenders to ask for collateral or a personal guarantee when offering startup funding.
Things to do if you’ve been rejected for a startup loan
- Try and find out why you were rejected. Many lenders won’t tell you this, but some will. Knowing why your application was denied can give you the chance to fix the issue before you apply elsewhere.
- Don’t send out dozens of new applications. Every time you apply for a loan, a hard search is recorded on your credit report. Too many of these in a short period can hurt your credit score, making it harder to get a loan. Choose who you apply to next very carefully. Check for any funding restrictions or limitations on the type of ventures they will finance. If your business falls outside their scope of operations, look elsewhere.
- Consider how you can make your application more attractive. This could include offering collateral, such as real estate, bringing in a cosigner, or asking for a different type of loan.
Article featured by SwoopFunding
What If I'm rejected for a startup business loan?
Getting a business loan is usually decided by several key metrics: How long your business has been operating, your credit report (business and personal), your business bank account data, annual turnover, financial history and the strength of your business plan.
However, if you’re seeking funding for a startup loan your business will be very new or may not be trading yet. This means you won’t have much business history and your paperwork may be minimal. In such case, the lender will typically pay more attention to your personal credit score when evaluating your loan application. It is also usual for lenders to ask for collateral or a personal guarantee when offering startup funding.
Things to do if you’ve been rejected for a startup loan
- Try and find out why you were rejected. Many lenders won’t tell you this, but some will. Knowing why your application was denied can give you the chance to fix the issue before you apply elsewhere.
- Don’t send out dozens of new applications. Every time you apply for a loan, a hard search is recorded on your credit report. Too many of these in a short period can hurt your credit score, making it harder to get a loan. Choose who you apply to next very carefully. Check for any funding restrictions or limitations on the type of ventures they will finance. If your business falls outside their scope of operations, look elsewhere.
- Consider how you can make your application more attractive. This could include offering collateral, such as real estate, bringing in a cosigner, or asking for a different type of loan.
Article featured by SwoopFunding