You might think your company would never be denied a business loan, but there’s always a chance that could happen. It’s important to be prepared for the steps to take if your company is denied a loan. Once that “no” comes through, it may seem like the business is out of options, but there are always other avenues to take. Here are some steps you can pursue for success if your business gets denied a loan.
Learn what went wrong
The first step you must take after being denied a business loan is finding out why you were denied the loan. A form could have been filled out incorrectly or all the necessary information may not have been provided. Talk to your point of contact with the lender and ask for a clear reason why you were denied the loan. To move forward and increase your success of finding funds elsewhere, it’s pertinent that you know why your application for a loan got denied in the first place.
Fix your credit
For many loans, the business needs to have a certain credit score and history that shows it’s a good candidate for the loan. Oftentimes, when a business gets denied a loan, it’s because of their credit score. If this issue is the case for your business, take steps to improve your credit score, even before applying for a business loan. Even if you aren’t currently planning on applying for a loan (though you probably are if you’re reading this article), work on improving your business credit score.
Work with a new lender
Just because your first business loan application doesn’t work out, that does not mean you can’t find a new lender. There are lots of business loan lenders out there, so do some research and find those that could work the best for you. Many lenders are willing to work with a business that does not have the best credit score, you just have to find them. Doing your research pays off and can lead to a great loan option.
Pursue other options
While there are a variety of lenders out there, there are also many different kinds of loans and options for funding that businesses can pursue. A business could apply for a line of credit or even a merchant cash advance, which can be a fantastic option for getting more capital. Businesses can also focus on finding individual investors or fundraising money or applying for asset-based lending. There are plenty of options out there, so being denied one loan application does not spell out the end of the world for a company.