Why My SME Loan Get Rejected?

Top 6 Reasons

Introduction of business loan rejection

Experiencing a loan rejection can be incredibly disheartening, especially when you’re a small business owner relying on that extra financial boost. Surprisingly, this is a common setback, with over 80% of small business loan applications being turned down by financial institutions. If you’ve found yourself in this position, don’t lose hope—it’s a hurdle many successful entrepreneurs face more than once.

Understanding why your loan application was rejected is crucial to navigating your next steps more effectively. While some lenders provide feedback on why they turned down an application, others may not be as forthcoming. It’s essential to dig into these reasons to tailor your future applications for success.

Are you tired of loan rejections? Let’s turn your next application around. Apply for a loan with us! We specialize in helping SMEs like yours secure the funding they need. Don’t let past rejections hold you back. Choose us for a smoother, more transparent loan application process that boosts your chances of approval. Reach out today, and let’s discuss how we can support your business’s financial needs and help pave the way for your success.

Why My Loan Get Rejected?

Bad Credit Score

A credit score assesses the creditworthiness of a person or business. Financial institutions check both personal and business credit scores before approving loan applications.

New to Business

If your business is new and lacks established credibility, securing a loan can be challenging.

Too Much Existing Debt

Lenders evaluate your debt utilization rate, which should ideally be under 30%. A higher rate makes your business appear too risky for a loan.

Poor Evidence of Strong Cash Flow

Lenders will review your business’s cash flow to determine if you have sufficient funds to cover expenses and repay the debt. Red flags are raised if your business spends more than it earns. Many small businesses struggle to maintain healthy cash flow, often paying suppliers upfront before receiving payments for their services. It’s crucial to have an effective cash management system in place.

Incomplete Documents

Failing to provide sufficient documentation to the bank can halt the progress of your loan application.

Banker Overload

Bankers often prioritize simpler cases due to their workload. Submitting your application to the right banker is crucial as they are responsible for preparing your report and submitting it for approval. A generic submission can be overlooked if the bank has a high volume of applications, especially if your case is complex.

Don't Know What to do next?

Connect with us today! Let our experienced advisors guide you through every step of securing your business financing. We’ll help you understand your options, improve your application, and increase your chances of approval. Don’t let a loan rejection set you back—reach out now and let’s make your business goals a reality.

What to do After Get Rejected?

Understand the Reasons

he first step is to find out why your loan was rejected. Lenders are generally required to provide an explanation, whether it’s due to a poor credit score, insufficient collateral, weak cash flow, or other reasons. Knowing this can help you address the specific issues.

Improve Your Credit Score

 If your credit score was a factor, work on improving it. This can involve paying bills on time, reducing existing debt, and correcting any inaccuracies on your credit report.

Revise Your Business Plan

Strengthen your business plan by clarifying your business model, updating financial projections, and demonstrating a solid strategy for future profitability

Add Your Collateral

Add collateral can help to strenghten the customer profile to secure the loan

Apply for a Smaller Loan

Sometimes, applying for a smaller amount than originally requested can result in approval, as it reduces the lender’s risk.

Seek Advice and Assistance

Consult with a financial advisor or a mentor who can provide guidance and possibly suggest other funding sources