What if Your Credit Application Isn't Approved?

Just in case you apply for a business loan and you are not approved, what do you do then? Most lenders, banks especiallly, are conservative in granting business loans. Given the obligation to ther stockholders and depositors, they need to be sure there’s a good chance the loans they make will be repaid.

I mentioned that in the last blog as we discussed the Equal Credit Opportunity Act and some of the basic principles of applying for a loan and many of the documents you would need in the build up of that process. If your application for credit is not approved, find out the reasons why. Some of the reasons that lenders often give for denying a business loan include, for example, insufficient owner’s equity in the business; lack of an established earnings record; a history of slow or past-due trade or loans payments; or insufficient collateral. Finding out the reasons may help you qualify the next time you apply.

If your application is denied, the lender must give you either:
A written statement of the reasons for the denial or a written notice telling you of your rights to obtain the reasons in writing. This notice may be given to you during the application process or at the time of the denial.

Let’s level with each other here, there should be no suprises in the approval or denial phase. If you’re denied, there should be no suprise. Really! The times we are now in this economy indicate the credit markets are tough but don’t let that cause fear to enter in. Instead, do your homework, plan properly and seek help.

One other thing, in the event you are denied, and lets face it, you probably will be…be ready without hesitation to move forward. In the last blog, I told you to make sure you have a back up plan to repay the loan once you are approved. So even if your success is delayed, the loan can be repayed without delay. Well, in the same way, have a Plan B to continue your plans to finance your business plan. There is money still out there! It may not come from the bank or some other form lender, however, grants and all sorts of other corporate gifts for small business are out there.