Finance is the backbone of any business to progress seamlessly.
The fact is finance required for progressing ahead cannot be standalone. It needs to be backed by a concrete credit base.
Credit can be used for a variety of purposes depending on the short-term or long-term business requirements.
Given the cause, denial can come as a fierce blow.
Because of violations of the terms, business loans and loans in the UK without guarantors alike are rejected.
If you have been denied the business loan, then halt and READ AHEAD!
Before proceeding with the options, let’s explore the reasons for denial of the business loan:
Reasons for a Business Loan Rejection:
- Poor credit score
- Insufficient flow of cash
- Budding entrepreneur
- High debt utilisation
- Incomplete paperwork
- No collateral
While these may be the possible reasons for a business loan rejection, you can reverse the situation by trying these options:
Try these options if you have been turned down for a business loan
1) Analyze the reason for denial
Evaluate the reasons for the denial of the loan, as mentioned early in the blog. When an individual applies for a loan, he/she undergoes a screening process. The lender conducts a thorough check of the documents submitted and the credit score before sanctioning the loan.
Interact with your lender and talk out the terms needed to get the loan, review your financial standing on those terms and act on that area before applying for the loan next time.
2) Review your loan-repayment credibility
Lenders grant loans after analysing the loan repayment credibility of the borrower. Review your business’s liquidity, ownership, age, size, solvency, productivity, asset turnover before filing for a loan. These factors directly affect the lender’s decision to sanction the loan.
Apart from that, peer into the existing debt record of the company, too, as the business should have a solid financial standing to pay off debts.
If you are applying for a business loan in the name of your business, chances are you might encounter a hard time getting it approved. The primary reason for this is that a business is a separate identity and hence has a separate credit report. In case you have a business credit profile, review your details with all potential business credit bureaus.
How to pay existing loans quickly?
- Make extra payments depending upon affordability
- Slash unnecessary expenses
- Make a settlement with your lender with a lump-sum offer
- Earning extra cash
3) Approach a New Lender
If you are struggling to abide by the terms of one lender, then you have the flexibility to switch to the next best option and revise your loan terms. With lenders having varied loan application requirements, you might get a loan from another lender after being denied by the previous one.
- Ask your acquaintances and family for potential lenders
- Make a list
- Contact at least 3 lenders
What to ask the lender in the appointment meet?
- Ask whether your plans sound realistic?
- Ask the lender to reveal the interest rates, APR (Annual Percentage Rate), fees, and monthly payment for different loan options
- Ask the lender to review the documents and the reasons for disqualification of the loan proposal previously, and the potential flaws that can reduce the chance of getting it approved.
An experienced lender will help you analyse the issues and suggest ways to address them efficiently. Seek a lender who will cover an extra mile for you on this route to getting the business loan approved.
4) Fill your next loan application carefully
While filing your next loan application, look forward to avoiding the mistakes that you committed previously. Pay attention to the minutest of details as oversight could lead to denial again. Review everything from the documents to attach to signatures, business details, and identity proof.
What do banks mainly consider before approving a business loan application?
- Credit history (commercial credit history, consumer credit history,
- Cash flow history
- Cash flow cycle
- Business projections
- Collateral available
- Income tax returns
- Business plan
- Financial statements
5) Frontier Investing
To avoid the debt trap, it is imperative to ensure a strong financial holding. You can consider the frontier investing option for long-term returns. Frontier investing is a small financial market with huge growth potential.
A young population and growing wealth drive factors Frontier markets.
How to invest in Frontier markets?
- Invest in Real Estate
If you share enthusiasm about exploring budding markets, then these will probably make sense. These markets in the real estate of a country show real potential. The ideal way to learn more about the market is to explore the country and then look for investing options.
· Start a business
Frontier investments are best if you are aiming to start your business soon.
6) Invoice Financing
Invoice Financing is a sort of short-term borrowing which lenders offer to their customers based on unpaid invoices. Unpaid invoices are the invoices which the company will receive at a later date.
Meanwhile, if a company faces a liquidity crunch, it shares the flexibility of go for invoice financing to meet the liquidity requirements.
Benefits of Invoice Financing
- Buy equipment or aperture
- Get immediate access to cash without a loan
- Grow your business with steady cash flow
- Only access important funds
- MINIMAL paperwork for the application
- Receive money in the account within 24 hours
- Reduce the risk of delayed payments
7) Credit Cards
Can you pay back what you borrow with credit cards?
You can reasonably believe so.
Choose a credit card that offers attractive rewards or is available at a low-interest rate or interest-free.
Use your credit card and pay off debts either all at once or short time. Doing so will help you avoid high interest rates.
Don’t get dejected at the rejection of your business loan. Just carefully analyze the elements and blend these in a manner to ensure approval in your next attempt.
If you made minute mistakes on your first attempt, revise them and file for a fresh business loan application.
On the flip side, if your business is undergoing financial issues or isn’t ready to file for a loan, you can analyze the alternative options listed above in the blog.
Whatever shortcomings led to loan rejection, overcome them and level up your business by utilizing the business loan efficiently.
Those seeking loans in the UK without guarantor should carefully walk by the loan terms. The best solution is to dust off, fix the mistakes, get your business loan approved, and grow your business.