The process of applying for a business loan may be daunting, especially with the number of documents required, all at the risk of potential rejection from the lender. After submitting your application, you may feel as though you have provided all the necessary documents, but you receive a notification that your loan request was rejected, and ask yourself, “Why was my business loan denied?”. Keep reading to discover how to successfully apply for a business loan.
To help you understand why your loan may have been rejected here are 6 potential reasons.
1. LACK OF CREDIT HISTORY
Lenders use your credit history to better understand your financial background, therefore without credit history, lenders will not be able to establish whether you will be able to meet your monthly repayments, resulting in your loan being rejected. Did you know that when you apply for an unsecured business loan credit history is not applicable? To qualify for an unsecured business loan all you require is a clean credit record for the business and its directors and sales in excess of R1 million per annum in turn over
2. TOO MUCH DEBT WHEN APPLYING FOR A BUSINESS LOAN
Having a significant amount of debt in your credit history is also a red flag to lenders. If your business cannot meet its current debt repayments or your assets are not sufficient to cover the entire loan amount, lenders will be hesitant to offer your business additional credit, thus resulting in your business loan being rejected.
3. INCOMPLETE DOCUMENTS
Failure to submit completed documents or missing documents will result in your application being rejected. Avoid spending hours collecting all the documents for a secured business loan, you can apply for an unsecured business loan with only 6 months bank statements.
4. YOUR BUSINESS IS A STARTUP
To ensure that you will be able to meet your loan repayments lenders want to see a track record, revenue, and some experience in the market, this shows that your business is established and that you can cover your repayments as well as your operating costs. If you have a business that has been established for a year and sales of over R1 million in turn over you may qualify for an unsecured business load. apply for an unsecured business loan here.
5. DO NOT APPLY FOR A BUSINESS LOAN WITH FALSIFIED DOCUMENTS
Applying for a business loan is asking for trust. Submitting fake documents means you are intentionally hiding something and will result in an immediate rejection and may even result in legal action being taken against you.
6. LIMITED COLLATERAL
Typically, lenders aren’t willing to risk lending money to businesses without some sort of promise of reimbursement. Most lenders require a physical asset or property that they can take if you fail to repay the loan. You can, however, apply for an unsecured business loan which is not tied to any asset, allowing you peace of mind while you grow your business. Apply for an unsecured business loan now.
When applying for a business loan it is your responsibility to ensure that you are worth the credit, so, make sure that you submit all the required documents and meet all the minimum requirements before starting the application.
Don’t waste time effort and sleepless nights applying for a secured business loan. All you need to apply for an unsecured business loan is:
- Income of R 1 million per annum or more…
- No security needed.
- Clean Credit.
- 6 months bank statements.
- Consistent Cash flow.
You will receive approval in as quickly as 3 days.