There is no denying that the standard of living has become higher with the increase of population. This increase has also lead to minimal job opportunities, which explains why most people are venturing into personal businesses. With fewer good paying jobs, most people prefer to work on their own businesses and create their own revenues. On the plus side, having your own business can be profitable and helps increase the job opportunities.
Starting your own business is actually easier said than done. Thousands if not millions of people have started their own businesses to no success. The main issue when it comes to starting your own business is the finances. Only a selected few can actually finance their own business from the start even if you do, you will need more money to keep it going until the profits from the business can cater for everything. Getting financial id can be a bit relieving a few factors will cost you this opportunity.
Why was your loan rejected?
You have a poor credit score
This is the most popular explanation for a loan rejection. Lenders will not give you a business loan if you have a poor credit report. This means that you do not pay your loans on time or you have major financial issues. Credit card companies keep a record of your poor financial decisions and impose them on your credit card history leading to major loss in credit points.
Lending services will use this report to determine the loan progression and how you have handles your loan payments in the past. If the credit report is negative, most lenders tend to perceive you as financially unstable and unreliable and they will reject your application. With unclear debts, there is no way you will get loan approval from any lenders. even multiple commitments on your salary can hinder you from making all the payments on time and this will block the lenders from trusting you to make the full payments.
You are starting a new business
This is another thing that lenders will look at before they approve any type of loans. That being said, a starter business does not qualify for any type of unsecured loans from lenders. They need more information on the profit and credit score of the company. Without this information, they cannot calculate your loan payment patterns and how you will complete the loan payments.
You have insufficient cash flow
Lenders also consider the income when they are approving any type of loan application. Without enough resources and income, you are deemed incapable of making the loan payments on time. if your payroll, inventory and rent together with other expenses are bigger than the profits you automatically do not qualify for any type of loan.
There is no collateral
It should e obvious that lenders do not give out loans without collateral. The collateral is meant to act as security in case you cannot complete the payments on the loan. You can opt for an unsecured loan but you will have to sacrifice more finances.