Why your business loan was rejected
Published by MFAA
Due to the risks involved, strict guidelines are imposed on business finance, so securing approval can be difficult. Here are a few mistakes to avoid to increase your chances of approval.
Not knowing your credit score
Many consumers may not realise the importance of a credit score. Not only is it taken as a reflection of your ability to make repayments, it also highlights your financial history which is why understanding what it is and how it can be improved can be vital.
Lack of planning
Understanding the assessment criteria and having a well-prepared application increase your chances of approval. The key things to be aware of when it comes to your application are a healthy debt to income ratio, existing business assets and a justified cash flow position. This ensures that the lender has a full picture of what has happened and what the future forecasts are.
Aside from providing these financial statements and forecasts, be prepared to discuss the purpose of the finance and how the business will service the loan.
Not having a business plan
Longevity in a business is what lenders want to see and, in order to showcase that, a good business plan supported by financial statements must be in place, and those statements should be geared towards demonstrating strong earnings.
Not having the right advice
Surrounding yourself with industry experts can provide you with a solid understanding of what needs to be included in your application, and a good equipment and commercial finance broker can match you with the right loan product.
MFAA accredited brokers can assist with business planning and finding
the right type of finance to support growth and success. Find an MFAA accredited finance broker
with expertise in commercial finance.