There are many reasons business loans may be refused or rejected. Here we look to highlight a number of reasons:
- We have talked about the ‘risk’ that your business may pose to a lender. This may be due to any adverse credit information that is available to the lender. If the business has received a County Court Judgement (CCJ) or maybe a Statutory Demand previously, then this will have a negative impact on your application.
- Banks and other finance houses will usually look to secure the money they lend to your business by way of a guarantee known as a Personal Guarantee (PG). The purpose of this is that you, as the principle of the business, will become personally liable for the loan should the business not have the ability to repay it. The bank will levy security against assets of the business or your personal property. By giving security to the bank by way of a guarantee you stand a much higher chance of having the lend approved.
- Well prepared and detailed applications are predominately the best way to apply for a business loan. If you submit sketchy figures or an application without much substance, banks will usually look to decline the application. Knowing what information to gather is sometimes the key to success. You need to be aware of the information required and often this can be obtained from your accountant. Previous sets of accounts and draft management accounts along with cash flow forecasts setting out the companies trading for the next 12 months are usually needed.
There are many other finance houses around other than the high street lenders and major banks.
Sometimes it may be easier to use an intermediary to take away the hassle of dealing with banks and their experience in knowing where to place your application and with what type of supporting documentation.
Please bear in mind that whilst banks can provide attractive interest rates it can sometimes take a lot longer to satisfy criteria to being able to obtain your business loan with greater applications declined. Whilst other specialist lenders can often turn around applications in a very speedy manner, they tend to have higher interest rates.
Fortis have access to numerous lenders in the marketplace who have different lending criteria. Our knowledge and experience of various lenders can take away the headache of having to source finance yourself. We can put your business in touch with multiple lenders or finance brokers who are sympathetic towards your position and enable a higher chance of obtaining an acceptance. As we have already said, it is important to take impartial advice and consider the full pros and cons of the various funding products on the market prior to making any decisions for your business. Call us today and speak to a member of our team for a free and confidential conversation about various finance options for you and your business.
