If you went to a big bank for your small business loan recently and you were rejected, don?t be discouraged, you can still get a loan from an alternative financing source. One thing to keep in mind, though, is the bank rejected your application for a reason. Finding the problem and trying to fix or mitigate the circumstance before you contact your alternative lender is important, though.
Why Did Your Bank Reject Your Small Business Loan?
You?re a Startup
Banks like to see some track record of business success before they would consider giving you a loan. Everybody?s Uncle had that stroke of genius one night to try and take Aunt Norma?s Chili and bring it straight to the consumers. Sometimes you need to prove yourself first and separate your new business from all the other pretenders before you can acquire financing. The issue is, even though alternative lenders can be less stringent than banks, they still usually require some sort of track record of successfully staying in business. You are not out of options, though. Try to get a personal loan from your bank if your credit score is good. Applying for a business credit card is another option if you do not need a lot of capital.
You Have Bad Credit
Let?s be honest, with the recent recession just beginning to die down, most businesses or individuals are bound to have some blemishes on their credit. It?s nothing to be ashamed of, but it is something good to know before trying for alternative financing. It?s also possible that some of these can be errors on your credit report. Credit reporting is not infallible and can be susceptible to mistakes. Make sure to point these out and get them corrected before seeking alternative forms of financing. You may still be able to get a small business loan with less than stellar credit, however, as we work with all types of lenders that can help most business owners, even in a less than ideal financial situation.
Your Financial Statements are Messy
Your business loan may have gotten rejected because your financial statements were disorganized or inaccurate. The great news is this is the only item on the list that is completely under your control and you can fix fairly easily. Having your financial statements in order is something an alternative lender looks for to make sure the business owner has their finger on the pulse of the business. You can hire an accountant or bookkeeper to help you, or if you decide to go the do-it-yourself route, Quicken is always a great option.
These are just some of the reasons your bank may have rejected you for a small business loan. Alternative financing is here to help, just make sure to take care of any issues you have beforehand, get organized and be prepared when you fill out your next loan application. This will help you secure funding and give you the freedom you need to make your small business successful!