Suffering a business financing rejection – whether it’s for a business loan, line of credit, or other product – can be challenging. You have to deal with many questions: “Why was the application rejected?”; “Should I try again at a different place?”; or, the more common, “Now what?” Remember, how you handle the rejection is crucial, as it can spell the difference between getting business financing in the future … or not.
Why was my business loan application rejected?
This question is the first one that managers or small business owners ask. The lending institution is not always forthcoming with the reason your business loan was rejected. The simple reason for that is that most business owners react defensively (or worse, aggressively) to the rejection. Then, they spend a lot of time trying to convince the lending institution to reverse its decision.
Most lenders (who are human, after all) are not comfortable in that scenario. The best approach is to not take the rejection personally. Instead, calmly and professionally ask, “What can we do to improve our chances of getting financing in the future?” or “How could we strengthen our application if we decide to try again with a different institution?” Both questions are open-ended and non-challenging. If you ask politely and listen carefully, you will probably learn why your application was rejected and what you can do to improve your chances next time. Be sure to thank the loan officer for their time and help, and leave on good terms.
Should you try again – somewhere else?
This question is difficult. The answer depends on why your business loan was rejected in the first place. If you think that you can address the issues and strengthen your application, then you should definitely consider re-applying at the same institution or somewhere else. It may help to enlist professionals, such as a CPA or financial professional, to improve your application.
Now what? Consider alternatives
One thing to re-evaluate with your CPA or financial adviser is whether a business loan is the best solution for your problem. Alternative products, such as an invoice factoring line, can also help companies that need business financing. One advantage of invoice factoring is that it’s a lot easier to obtain than conventional business financing.
One last word
Our most important recommendation is that you seek the help of a competent financial adviser, such as a CPA with experience in commercial finance and familiarity with products such as business loans, lines of credit, capital equipment financing, leases, and invoice factoring plans. This guidance helps you determine the best product for your specific needs and can also help strengthen your application.
Get more information
Are you looking for business financing? We can provide you with a competitively priced factoring line. For information, get an online quote or call (877) 300 3258.