What to Do When a Lender Turns Down your Loan Application?
If your loan application is ever turned down by a lender, it can be very disheartening. However, there are still some ways to go after that happens.
Improve Your Credit Score
Do you know your business’s credit score? Besides personal scores, lenders evaluate credit history while deciding whether or not to grant a business loan. They do this to get a full picture of your personal and business finances.
Just like a personal credit score, a business score rates a company’s credit based on many factors including payment history. It is possible to make this better by applying for business credit cards in your company’s name, and by working with suppliers who report payments. Try to avoid funding your company through personal loans, because this will not contribute to your business’s credit history.
Get an SBA Business Loan
When you have run out of all other business financing options, and if you can prove that fact, you may be able to get financial help from the US government. The Small Business Administration has many programs that provide entrepreneurs with funding. It partners with commercial banks, which act as co-signers on loans.
However, business owners should note their business credit scores matter when they look for SBA loans. You usually need to have a score of at least 140 to qualify for SBA’s 7(a) loan. Do read what other SBA loan requirements are there to get a better understanding of what to expect going in.