There are several reasons why banks deny requests for small business loans. Here are the top four reasons.
Most banks will require security for loans. Businesses who don’t have any property or real estate to secure the loan may be denied.
Businesses who have been trading for less than 2 years will likely not be approved for a bank loan. Banks approve loans for businesses who have been operating for at least 2 years.
This is self-explanatory in theory, but something as simple as a dispute with a supplier or a missed payment can impact negatively on your credit rating, meaning the banks may not approve your loan.
Lack of information
Your last available Tax Returns don’t always show any potential improvement in the business performance over the last 6 months. This is a huge issue for growing businesses wanting loans from banks.
If you find that your loan request has been denied, there’s a few things you can do.
Firstly, understand the bank’s position and see whether that can be overcome. Bank finance is still usually the cheapest option if available.
Secondly, use a trusted advisor like a finance broker or an accountant to talk through what your options are, and then investigate alternative sources of finance. There are a multitude of different business lending products available.
At Limba Loans, our focus is on making things simpler for growing businesses. We can offer our ear to better understand your business opportunity and your situation.
We will talk through any options we feel may suit your needs, even if that’s not a Limba Loans option. We can also refer you to a finance broker from our network of professionals to assist you with advice.
If you’re looking to expand your business, contact Limba Loans today. We’re here to help you grow.