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The Reasons Why Your Shitty Idea Cannot Get Loan
#1
[Image: 20161219201421-GettyImages-530813422.jpeg]

You were counting on that small business loan to help your business grow, but the bank said "no." If it makes you feel any better, you’re not alone.

https://www.entrepreneur.com/article/286737
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#2
Over the last couple of years, large banks have been reducing the amount of loans that they’re issuing to small businesses. The Wall Street Journal reports that it may be because of, “Weak demand, tighter lending standards and high costs have put a lid on small business borrowing” following the 2008 economic crisis.
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#3
However, getting rejected is never fun, even if the circumstances are out of your control. That’s why you should know exactly why your loan was rejected in the first place so that you can make sure that it never happens again.
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#4
Sometimes a bank will share these details, but if not, I find that it's typically for one or more of the following five reasons:
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#5
1. Bad credit

Credit history is one of the first things that lenders will review when going over a business loan application. A good credit score proves that the business owner has properly managed both of their personal and business finances by avoiding bankruptcy and making all of their payments on-time.
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#6
A poor credit score, however, can make lenders wary since it demonstrates that the individual can not make well-informed financial decisions and are unable to meet the financial obligations that are included in the loan agreement. This is even the number one reason why a payment processor like myself will reject you and your company from even accepting payments.
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#7
The good news is that you can repair your low credit score by paying your bills ontime, getting your credit card balances under control (not cancelling your cards) and repairing any mistakes that appear on credit reports. Keep in mind, bad credit on either the business owner or the business can impact the business getting a loan. Here are a few other credit myths I've put together that you should know about.
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#8
2. Weak cash flow.

“Banks are very concerned that businesses have enough cash flow to make monthly loan payments in addition to covering their payroll, inventory, rent and other expenses,” says Warren Lee of TheLendingMag Media Group. “Unfortunately, many startups and small businesses struggle to keep enough money in their bank accounts even when they’re profitable, often because they have to pay 3rd-party suppliers upfront before they get paid for their product or service.”
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#9
By creating a sticking to a budget, small business owners will have a better idea on how much cash is coming and going through your business operations. If you notice that there is a weak cash flow then you need to cut expenses and find ways to bring-in some extra so that banks won’t reject your application.
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#10
3. Time in business and limited collateral.

For new small business owners, obtaining a bank loan may seem like one of the best ways to jump-start your business, or at least get you through your first trying year. Amy Blatterfein points out in an article for Ventury Capital, “Loans for those situations do exist. But, you are not going to find them at your local bank. If you’re looking for a traditional simple interest business loan with a monthly payment you’re going to need to be in business for at least two years.”
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