Just applying for a business loan will not guarantee your business loan application to get approved. The business loan approval process is very stringent since most banks do not want to risk their money. Many times a business loan application is rejected for a number of reasons. However, a rejected business loan application is not the end of the world. Instead of giving up, the business owner must look for the ways by which he can increase his business loan eligibility.
Read on to know what you should do if your business loan application is turned down by a bank or an NBFC:
Ask the Reason
If once your business loan application is rejected, it is impossible for you to get the lender’s decision changed. But there would be a reason why the lender turned down your application. Ask the same and try to understand the reason for denial. This way you can make the necessary changes in your business loan eligibility. And the next time when you re-apply, your application would certainly not be rejected.
Improve Your Financials
In the case of business loan denial, it is important to improve business financials, such as annual revenue, cash flow, business savings, etc. All these factors play a significant role when a lender checks your business loan eligibility.
Check Credit Reports
When you are denied a business loan, you should analyse your credit report. Is there any error in your history that has led to denial? Also, check your credit score with the different major reporting agencies – CIBIL, TransUnion, etc. In case you find any error in the report, get it corrected immediately.
Consider Other Alternatives
A denial from one lender does not mean denial for all the lenders. All lenders have different business loan eligibility and requirements. While some may disapprove your business loan application, other may find you eligible. Noteworthy, NBFCs have relatively flexible business loan eligibility criteria as compared to banks. You can apply for an NBFC business loan as an alternate.
Next Time, Be Careful
Next time when you apply for a business loan, keep the lender’s eligibility and required documents in mind. Also, this time check your Credit Score before applying and fill the business loan application form carefully.
Small business owners avail a business loan in the severe need of finances. And if your application is once rejected, follow the above-mentioned points and prepare yourself well for a business loan. However, as it is often cited that the bank usually adopts stringent criteria, you can look forward to avail a business loan from an NBFC.