*Contributed by Satchit Hasabnis.
Are you looking out for a business loan? Have you recently applied for a loan but had your application rejected? Why do you think your business loan application was rejected? This depends on certain factors which you may not be entirely aware about. There could be several reasons why your business loan was denied.
These are 8 major reasons why business loan applications are rejected.
Bad Credit Score
Though you are applying for a business loan, your personal credit score does affect your chances of your loan’s approval. This holds true even if the company has been in existence for a while. In case your personal credit score is bad then the financial institution may not trust your financial position much. Thus the bank may hesitate to provide a loan as your repayment history would not be up to par. It is very important to keep your own credit score strong by making regular payments. Review your credit score time and again and take steps to repair it.
Some industries or areas of business could be considered as risky in nature, by traditional banks and lenders. For instance, hotels and restaurants can be seen as risky to lend or fund as there is a high failure rate involved. If this is why your business loan application gets denied, then try looking out for other financial institutions that lend to the industry your company operates in.