Based on 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.
If your balance sheet is out of whack, most lenders will automatically deny credit. If your business is already heavily in debt then this will be an area of concern that you will want want to address.
How your business obligations are being paid will play a role in your approval or denial for credit. You will need to monitor your D & B Paydex credit score and other payment performance data and make adjustments as necessary. Most payment experience data is only reported for 2 to 3 years so if you’ve made a mistake don’t let it worry you. Just keep the positive payment history building and make sure what is being reported to date is accurate.
Also, keep in mind that if your business bank account balances are habitually low, this can actually rule you out for certain types of business credit. Try to maintain $10,000 or more in your business bank accounts to avoid this situation.
The bottom line is that if your business has had a problem in getting credit there is something that makes it appear that your business is a bad risk.
To improve this situation you must analyze and understand your business credit report and business finances. This will enable you to take the necessary steps to identify the problem and take corrective action.
Sometimes the lack of history or data on your business will be a key factor in credit denial.
If this is the case it can be easily remedied by taking careful steps to shape your business’s credit profile and financial picture.
Michael Sacks is a recognized expert with nearly thirty years experience in financial services and banking. Through the website for Great American Business, Inc. you can learn more about establishing business credit and obtaining funds for your business. You can also request a complimentary e-book and learn how to avoid the 9 devastating financial mistakes entrepreneurs make.. Free reprint available from: What To Do When Your Business Is Denied Credit.
