5 Things to Do When Your Business Gets Rejected for a Bank Loan

BURLINGAME, Calif. - May 13, 2015 - PRLog -- 5 Things You Can Do When Your Business Gets Rejected for a Bank Loan

by Brandi Gallegos, www.the-edge.me

During the financial crisis of 2008, small businesses were among the hardest hit. Many went bankrupt, thereby defaulting on financial obligations. Banks, especially, the biggest ones, cut back on small business loans dramatically after that time and have been hesitant to recommence underwriting small business loans. So, do not be surprised if the purse strings are tight at your local branch. If you find yourself rejected for a loan, there are lots of things you can do to move forward toward getting the capital that you need.

First, do not despair. Now more than ever in US history, capital is being made widely available to small businesses, thanks to various innovations in financial technology and the online marketplace. A business has loads of fresh choices for online financing which would be happy to step up and provide funds when banks have backed down. Their investors are hungry for investments and their balance sheets are loaded with capital just waiting for borrowers to come along and use it.

In fact, with so many new options on the table, it may be difficult to know where to begin. The most obvious choices may be household names such as Lending Club and Prosper, but those aren’t necessarily the best, especially for business needs which may be significantly different from the needs of the personal borrowers that are the primary clientele for those platforms. A search engine will often return to you a thousand different lender links, enough to set your mind whirling and make it difficult to differentiate between what each lender offers.

2)   Take a good look at your options. To help clarify them for you, we recently completed a review of online Commercial Lenders. It’s available for your reference at http://www.the-edge.me/news?id=78 . There you’ll find a table summarizing what the leading online lenders have to offer you in terms of financing options. This should help you identify which lenders might best meet your needs, as it provides information on the timeliness, amount of money, duration of loans, etc. that each lender offers. It’s a terrific menu of options from which you can simply select your favorite fare.

     Get yourself together. If you’ve already applied for a bank loan then you’re probably already over-prepared to apply for an online loan. These online lenders pride themselves on having quick and easy application processes to make their loans convenient and appealing. However, many still require basic information such as your Business ID number and bank statements. Make sure you have that documentation on hand in digital format, either downloaded from your bank or scanned in from a hard copy.

Note that aside from the basic information, online lenders may have big data algorithms that assess your creditworthiness automatically or without any additional effort on your part. These factors (see below) allow them to gain perhaps even better insight into your creditworthiness than the typical bank.

4)    Shop around! Since online loan applications can take as few as 5 minutes to complete and you’re not obligated to borrow after completing them, feel free to shop around to see what terms and rates the lenders are willing to offer you. Some can offer much lower rates because they have cheaper access to capital or more capital on hand. Most lenders do not have prepayment penalties, but it’s worth double checking finer points such as that just to be sure. Also, if you like the terms of one lender but another lender offers you a lower rate or cost of capital, you could mention that and attempt to negotiate for a better rate. Some lenders have a lowest rate guarantee or policy and will compete for your borrowing business. Be sure to note during the application process whether the lender has adequate customer service. Sometimes that can make all the difference between a good borrowing experience and a bad one.

5)    Go for the gold. Once you’ve determined which lender you’re most comfortable with, go ahead and borrow. Then, be sure to sign up for any convenience repayment plans that they offer, such as automatic withdrawals from your bank account to make repayments on the loan. That will make your life simpler in the long run and can save you from incurring costly late fees. And if you’re having trouble paying back on schedule, don’t hesitate to reach out to your lender to discuss possibilities for making arrangements. Some lenders will allow you to roll the loan over or extend its term.

(for this original white paper, go to http://www.the-edge.me/news?id=137)