What Should You Do After a Business Loan Denial?

What Should You Do After a Business Loan Denial? The denial of a loan can be a major setback for a business. However, if this has happened to you, it’s important to note that there are a number of options available and certain steps you can take to help your business get the funding it needs. Considering that your first step may be to reapply for a loan or try a different lender, keep the following tips in mind: Know what banks are looking for When you apply for a loan, the lending institution will thoroughly analyze your business and check for a good credit score (over 700), a proven ability to repay the loan with interest over time and the potential for collateral with the loan. By knowing what the banks are seeking during this process, you’ll be able to strengthen those areas and improve your chances of success. You should also regularly check your credit score, and can do so by obtaining your report from a variety of different sources for free using the provisions of the Fair Credit Reporting Act. Once you have your report, check back on the Federal Trade Commission website to find tips on improving your score. Investigate other lending options You don’t necessarily have to go to a bank to get the capital you need. Other sources could be more flexible and better suited for your company. Examples of these alternatives include:
  • Equipment leasing. Instead of pursuing a business loan to purchase equipment, you may be able to work with an equipment leasing provider. This saves significantly on costs, while allowing you to more easily update your equipment and technology as time goes on.
  • Peer-to-peer lending. In this structure, prospective borrowers fill out an application online, pay a fee and then receive a rating according to the risk associated with lending money to them. You then get matched up with organizations that could be interested in funding your business or project.
  • Niche lending. Some lenders focus on specific industries only, so depending on the type of business you have, a niche lender that understands the work you do might be a great option.
  • Local lending. Other lenders are specifically focused on providing funding to businesses within their local geographic area, with the goal of strengthening business and the economy in their communities.
Make your business as profitable as possible If you have products or services that just aren’t selling, get rid of them. If you are operating in an inefficient way, it may be time to overhaul your processes. You might consider bundling services or products — or forming a partnership with another organization. After a business loan denial, don’t wait to take action to do what is right for you and your business. If you have questions about these options, including equipment leasing and how it can help your company, contact the team at Fidelity Capital right away.