You’ve worked so hard to compile all the details for the business you envision, and when your small business loan¹ application is denied, it can send you into a bit of a tailspin. The important thing is not to get discouraged or talk yourself out of pursuing your goals. You’re not the first to be denied a small business or pharmacy finance loan, and you certainly won’t be the last. There are other options available and several steps to take after being denied.
This is a critical step to recovery. You may be fighting with the feeling of rejection, but keep in mind you’re also unaware as to why your small business loan application was denied. Don’t be shy to request a letter of explanation from your lender to understand which requirements your application didn’t meet. As it is, lenders are required to divulge certain disclosures and are happy to do so. This step will help you make the necessary adjustments for when you re-apply at a later date.
Common reasons for being declined include:
Based on what your lender listed as the issue on your small business loan application, take the necessary steps to rectify the situation. Your lender is required to provide you with a notice of adverse action if your credit was the issue. This notice explains why your credit history didn’t meet their requirements. One example is because you have defaulted loans. If you have other loans, , such as small business loans for restaurants, work towards paying them off. The amount you use on debt repayment each month is one of the major factors lenders consider in weighing your application.
Even though your application is for your small business, your personal credit score has a heavy effect on it. Check your credit score with more than one reputable reporting agency to ensure there are no mistakes or discrepancies; if there are, be sure to contact them to resolve the issue.
On the other hand, small businesses are often prevented from acquiring a loan because they have a lack of credit. Or, while a rarity, it’s also entirely possible that lenders are prejudice against an applicant’s gender.
¹ Greenbox Capital Small Business Loans may not be available in all regions of the United States or Canada.
² Greenbox Capital Merchant Cash Advances may not be available in all regions of the United States or Canada.
You don’t have to re-apply to the same lender. There are other banks or alternative funding companies. In some circumstances, it is best to change lender, as some are more open than others; banks, for instance, have stringent requirements compared to alternative funding companies, even when applying for law firm loans. You can also look into other loan options to see if you meet those requirements instead.
Greenbox Capital is an alternative lender, and we judge your application based on other factors aside from your credit scores, such as your business’ potential. We consider businesses with bad credit, and we forge many strong partnerships with female entrepreneurs. Our financial experts work hard to help you achieve your business dreams and will suggest better options that suit your type of business. Merchant Cash Advances¹ (MAC) are something to consider if you run a business that accepts credit cards.
Start expanding your business by applying for a small business loan today!