Even if you have done extensive research to find a lender who will give you the best deal, getting a business loan approved can be challenging. Despite the research, there is no guarantee that your business loan application will be approved because there are many potential grounds for rejection.
Here are a few possible explanations for the rejection of your business loan application.
1. Income and Debt Per Year
When evaluating your loan application, lenders typically look at your yearly income as well as your present debt condition. This aids them in determining whether you are capable of repaying the capital sum you request. The lending company may reject your application if they believe that your annual income is insufficient to enable you to repay the loan. Paying off any outstanding debts before applying for a loan is advised because it raises additional red flags if you have any. This might also be essential when you apply for payroll financing. Along with business loans payroll financing loans need to be approved.
2. Future loans made in the past
Banks and lending organizations can look up your financial history and determine whether you’ve taken out loans from any banks or other entities. Because of this, it is suggested that you only take out loans if absolutely essential and that you always make your instalment payments on schedule. This is why having outstanding loans from the past that are unpaid could be another reason your business loan application is denied.
3. A different signature than yours
Though it may not occur frequently, it does occasionally. It could be difficult for some people to consistently get the perfect signature. When your signature doesn’t match, your business loan application is rejected because getting a loan is a difficult process. For this reason, you must make an effort to have a perfect signature on all of your documents to prevent your application from being denied.
4. Bad credit history
Even though some claim that you can improve your credit score in just 24 months, occurrences like a bankruptcy or foreclosure will hurt your application.
5. Inexact or Missing Business Loan Application
The details you offer on the business loan application, such as your name, phone number, account information, residential location, etc., are crucial. It will be applied to get the necessary data about you. They serve as a way to validate your credibility. A document that was missing from a loan application or crucial information that was required to be included can cause it to be refused. Due to this, it is imperative that you complete your application completely and attach all required supporting documentation.
6. Inconsistent Residential Address
If banks are unable to confirm your residential stability, they may occasionally reject your application. Your residential address should be included in the documents you submit for KYC. If you rent your home, you might need to include some extra information in your application.
7. Eligibility Rejected
You must meet certain requirements in order to be eligible for personal loans, such as age, education level, nationality, etc. Before approving your business loan application, banks will make care to scrutinize each and every piece of documentation.
These were few of the reasons why your business loan application might be getting rejected.
