{"id":2870,"date":"2020-10-26T09:04:01","date_gmt":"2020-10-26T14:04:01","guid":{"rendered":"https:\/\/www.headwaycapital.com\/blog\/?p=2870"},"modified":"2020-10-27T09:04:59","modified_gmt":"2020-10-27T14:04:59","slug":"what-to-do-cant-get-business-loan","status":"publish","type":"post","link":"https:\/\/www.headwaycapital.com\/blog\/what-to-do-cant-get-business-loan\/","title":{"rendered":"What to Do If You Can\u2019t Get a Business Loan"},"content":{"rendered":"<p>Recent data shows that <a href=\"https:\/\/www.washingtonpost.com\/business\/2020\/04\/09\/small-business-coronavirus-emergency-loan\/\" target=\"_blank\" rel=\"noopener noreferrer\">70 percent of small businesses applied for an emergency loan<\/a>, but only 4 percent were actually approved. Small companies have been especially hit by the poor economy, low consumer confidence and shifting regulations. If you applied for funding but were denied for a business loan, it might seem like you\u2019re out of options to help weather the storm.<\/p>\n<p>In reality, there are many sources of business financing, from SBA and bank loans, to credit cards and <a href=\"https:\/\/www.headwaycapital.com\/line-of-credit\" target=\"_blank\" rel=\"noopener noreferrer\">business lines of credit<\/a>. If your application was rejected from one or more lender, you still have options to run a successful business. Read on to learn what lenders look for, and what to do if your business loan application is denied.<\/p>\n<p>&nbsp;<\/p>\n<h2><strong>What Lenders Look For On Your Application <\/strong><\/h2>\n<p>Lenders aren\u2019t required to provide a reason when business loan applications are not approved. However, most lenders consider the <a href=\"https:\/\/www.businessbacker.com\/blog\/the-5-cs-of-credit\/\" target=\"_blank\" rel=\"noopener noreferrer\">Five Cs of Credit<\/a> on business credit requests:<\/p>\n<ul>\n<li><strong>Character: <\/strong>This refers to the business\u2019s borrowing history, or whether its bills and debts are repaid on time.<\/li>\n<li><strong>Capacity:<\/strong> A business\u2019s capacity, sometimes referred to as cash flow, is its financial ability to repay the loan in addition to typical operating activities.<\/li>\n<li><strong>Capital:<\/strong> A business owner\u2019s personal monetary investment into the business.<\/li>\n<li><strong>Condition: <\/strong>External factors, such as the economy, may impact a business\u2019s loan repayment.<\/li>\n<li><strong>Collateral: <\/strong>If a loan isn\u2019t repaid, lenders can liquidate some forms of collateral to recoup the principal value.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What to Do if You Can\u2019t Get a Business Loan<\/strong><\/h2>\n<h3><strong>Explore Alternative Funding Options and Assistance<\/strong><strong>\u00a0<\/strong><\/h3>\n<p>A variety of new programs have emerged to help small businesses that are suffering from economic hardship on federal, state and local levels. Depending on your business, location(s) in which you operate and other factors, you may qualify for such programs, loans and grants to improve your financial situation and keep your business afloat. Learn more with <a href=\"https:\/\/innovativelending.org\/resources-for-small-businesses-during-coronavirus-crisis\/\" target=\"_blank\" rel=\"noopener noreferrer\">this resource guide<\/a> from the Innovative Lending Platform Association.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h3><strong>Reduce the Loan\u2019s Principal Amount<\/strong><\/h3>\n<p>One simple explanation why a loan application was denied may be because the requested principal amount was too large for the business\u2019s budget. You may be able to improve your chances of approval by requesting a lower loan principal. Smaller loans will also have a lower monthly payment, which can prevent the strain on your cash flow.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Look for a Different Type of Loan<\/strong><\/h3>\n<p>The type of business loan you apply for can also impact your likelihood of approval, in addition to your ability to repay the loan. For example, if you\u2019re looking for a financing option to help cover day-to-day expenses or when cash flow is low, a <a href=\"https:\/\/www.headwaycapital.com\/line-of-credit\" target=\"_blank\" rel=\"noopener noreferrer\">business line of credit<\/a> gives you access to credit whenever you need to borrow money.<\/p>\n<p><strong>\u00a0<\/strong><\/p>\n<h3><strong>Improve Your Business and Personal Credit<\/strong><\/h3>\n<p>Just like personal credit, business credit measures creditworthiness, or one\u2019s recorded financial history. Both numbers are crucial factors on a business loan application.<\/p>\n<p>If your <a href=\"https:\/\/www.businessbacker.com\/blog\/how-small-business-loan-affect-personal-business-credit\/\" target=\"_blank\" rel=\"noopener noreferrer\">business or personal credit scores<\/a> are low, take the time to improve them. Good credit can help you save money on interest and make you a better business loan candidate.<\/p>\n<p>Some companies may not even have a recorded business credit history. If you don\u2019t have a business credit score, <a href=\"https:\/\/www.businessbacker.com\/blog\/how-to-repair-your-small-business-credit\/\" target=\"_blank\" rel=\"noopener noreferrer\">learn how to establish small business credit<\/a>.<\/p>\n<p>&nbsp;<\/p>\n<h3><strong>Improve Cash Flow<\/strong><\/h3>\n<p>Positive cash flow is another important factor that lenders consider on loan applications. While you may not have a lot of room to cut costs, these strategies can help you <a href=\"https:\/\/www.headwaycapital.com\/blog\/small-business-recover-negative-cash-flow\/\">recover from negative cash flow<\/a>:<\/p>\n<ul>\n<li>Reduce overhead costs: Can you pivot to an online-only establishment? Are there less expensive suppliers with a similar product? If possible, look for ways to reduce recurring <a href=\"https:\/\/www.headwaycapital.com\/blog\/reduce-overhead-small-business\/\">overhead expenses<\/a>, like rent or material costs.<\/li>\n<li>Automate repetitive tasks: Reduce labor costs and allow employees to focus on key business objectives with <a href=\"https:\/\/www.headwaycapital.com\/blog\/tips-automating-small-business\/\">task and workflow automation<\/a>.<\/li>\n<li>Do it yourself: Use <a href=\"https:\/\/www.businessbacker.com\/blog\/cost-effective-ways-expand-reach\/\" target=\"_blank\" rel=\"noopener noreferrer\">free and low-cost marketing strategies<\/a> or <a href=\"https:\/\/www.headwaycapital.com\/blog\/bookkeeping-basics-small-business\/\">handle your own small business bookkeeping<\/a> to save money.<\/li>\n<li>Review customer payment options: Late payments can severely affect your cash flow. Consider adjusting customer payment terms in order to avoid or penalize such behavior.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h3><strong>Try Again<\/strong><\/h3>\n<p>Just because you couldn\u2019t get a business loan before doesn\u2019t mean you won\u2019t be able to secure one in the future. While it may take a while to improve business credit or pivot your business, you can always apply for business funding again once you\u2019re ready.<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recent data shows that 70 percent of small businesses applied for an emergency loan, but only 4 percent were actually &#8230;<\/p>\n","protected":false},"author":16,"featured_media":2871,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[609],"tags":[249,616,345,617,572,312],"class_list":["post-2870","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-small-business-finance","tag-business-credit","tag-business-finance","tag-business-line-of-credit","tag-emergency-business-loan","tag-small-business-credit","tag-small-business-loan"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>What to Do If You Can\u2019t Get a Business Loan - 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