There are small business owners all over Canada who know the sting of rejection. They entered their local banks with confidence that they would have their business loan applications approved. Unfortunately, they were denied. What happened? Why did the bank’s loan officer deny the application?
As Business Link explains, there is a myriad of reasons why a bank may have chosen to reject a loan request. “The banks may be unhappy with credit scores, cash flow, CRA payments not being up to date, collateral, the amount of pre-existing debt, or other external conditions,” explains their website.
Get feedback from your would-be lender.
There’s nothing quite like the horse’s mouth from which to get information. Attempt to speak directly to your bank’s loan officer to receive some insight into why your application was rejected. As Tim Berry of Bplans explains, business owners that have had denied loan applications get form letters. They should be paid attention to. However, an in-person meeting will help to provide clarification.
“When you get to a person, bear down on the details and ask questions,” advises Berry, “Ask what would have made a difference and which credit reporting agencies your bank used to get information about your business. Determine when and how you can reapply, as well as what you’d need to change to get an acceptance. As you do this, frame the conversation right. Don’t act angry or argumentative, but like you respect the decision and want to know more about it.”
Find out what you can do to fix the issue.
The most common business loan rejection reasons are poor credit, insufficient collateral, poor cash flow, too much debt and a poor credit score. Let’s start with the last two. Do you have outstanding debts that you can pay down? Banks are very hesitant to provide money to individuals who already owe a lot of money to lenders. Pay off your credit card bills and make sure you are in good standing with any institution you borrow from.
This will help to improve your credit history while also taking some of your debt off the books. Berry notes that some of these issues are easy to fix. “Too much debt presents the option to pay some existing debt off, or potentially identify errors in the financial reports provided to the banks,” he explains.
Opt for a merchant cash advance.
A merchant cash advance doesn’t request any collateral or require a credit check. It is not a loan. Instead, it is a purchase of a merchant’s future credit card and debit card sales. When applying for a merchant cash advance, a business owner doesn’t need to worry about his or her cash flow or completing a detailed business plan. Funding is often made available within 24 hours!
As Canadian business owners, we understand that when an opportunity or unexpected emergency presents itself, timing is everything. That’s why, at Divvia, our merchant cash advance program comes with an easy application process that requires minimal paperwork. By getting a FREE, no obligation quote, you will learn of detailed financing options including how much financing you qualify for and the cost associated with accepting the advance.
Please don’t hesitate to call us at 1-877-748-2884 or send us a message on our Contact Us page!
