According to recent reports as many as one third of applications for business loans are denied.
The first thing you need to do is try to determine where the problem is. There are several several areas of possible concern to consider. Does your business have a profit margin? Improving your profits by reducing and trimming down the operational excess and unnecessary business spending can help improve profits and boost your chances of getting approved.
Most lenders will deny credit quickly if your balance sheet is out of whack. If your business is already debt ridden then this will be an area of concern that you will want to address as soon as possible.
How you are paying your existing business vendors will play a role in your approval or denial for credit. If you've been denied business credit you will need to check your Paydex Credit Score and other payment records to make adjustments as necessary. The bulk of payment experience data is only reported for 24 to 36 months so if you've made a mistake don't let it bother you. Just keep the positive payment history continuing and make sure what is being reported to the agencies to date is accurate.
In addition, keep in mind that if your business bank account balances are continually low, this can actually rule you out for certain types of business credit. If you can, maintain at least $10,000 in your business bank accounts to avoid this situation
The bottom line: If you've been denied credit there is something about your business that makes it appear to be a bad risk.
Your job is to analyze and understand your business credit report and business finances and determine the the problem is so you can take the necessary steps to correct your course.
Sometimes the lack of history or data on your business will be a key factor in credit denial.
This is something that should be easily corrected by taking diligent steps to shape your business's finances and credit profile as outlined above.
The first thing you need to do is try to determine where the problem is. There are several several areas of possible concern to consider. Does your business have a profit margin? Improving your profits by reducing and trimming down the operational excess and unnecessary business spending can help improve profits and boost your chances of getting approved.
Most lenders will deny credit quickly if your balance sheet is out of whack. If your business is already debt ridden then this will be an area of concern that you will want to address as soon as possible.
How you are paying your existing business vendors will play a role in your approval or denial for credit. If you've been denied business credit you will need to check your Paydex Credit Score and other payment records to make adjustments as necessary. The bulk of payment experience data is only reported for 24 to 36 months so if you've made a mistake don't let it bother you. Just keep the positive payment history continuing and make sure what is being reported to the agencies to date is accurate.
In addition, keep in mind that if your business bank account balances are continually low, this can actually rule you out for certain types of business credit. If you can, maintain at least $10,000 in your business bank accounts to avoid this situation
The bottom line: If you've been denied credit there is something about your business that makes it appear to be a bad risk.
Your job is to analyze and understand your business credit report and business finances and determine the the problem is so you can take the necessary steps to correct your course.
Sometimes the lack of history or data on your business will be a key factor in credit denial.
This is something that should be easily corrected by taking diligent steps to shape your business's finances and credit profile as outlined above.
About the Author:
Michael Sacks is a recognized expert with more than 20 experience in financial services and banking. Through his company's website you can learn more about establishing business credit and obtaining funds for your business. You can also request a free e-book and learn how to avoid the nine devastating financial mistakes entrepreneurs make.. Also published at What To Do When Your Business Is Denied Credit.
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