Why Your Business Loan Was Rejected (And What To Do Now)

It can be frustrating to get rejected for a business loan, but a rejection can show you how to improve your business idea and find a better lending solution. Here are some common problems with your business loan proposal, and how you can fix them.

You Don't Have a (Good) Plan

Business loan companies will want to see that you have put in a lot of thought about how your business will make its money, the timeline of growing your income and paying back the loan, and what you will do if the business doesn't produce income as you've planned. They also want to know that your idea is viable; you should present research to show how similar businesses have been successful. If you don't have a strong, written plan that covers all of these points, then you may need to sit down with a financial counselor to flesh out your business idea.

Your Credit Isn't Good

If you have limited or poor credit, you may need to wait a while before starting your business. Take six months to open a credit card, make some purchases, and pay them back on time; this can have a great impact on your limited credit. If you can't wait this long, consider alternative business loans such as a money lending service. These alternative loans can be a great way to jumpstart your business and begin building credit as well.

You Don't Have Enough Income

Another reason that you can get rejected for a business loan is if you don't have a strong income history. Banks may not be interested in risking their money on you if you haven't proven that you can make a decent income from your pursuits. However, there are alternatives to consider for getting a loan.

Aside from major banks, you may try a smaller money lending service that is more lenient about your credit history and income. You can also try a peer-to-peer or online lending company. Some of these options have different criteria altogether for evaluating your credit-worthiness. For instance, some online lending platforms will take into account your GPA and educational history when offering you a loan.

When you're just starting your business career and don't have a strong history of success, it can be difficult to get someone to take a chance on you. However, don't fear; there are many ways to improve your worthiness for a business loan, and many different options to try for finding business loans. 

For more info, speak to a local wealth management service.