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What To Do If Your Business Loan is Not Approved

Words that all business owners dislike hearing from a lender

are, "Sorry, we just can't approve your loan." It's frustrating

when your business loan is not approved, and it may feel like

your business ideas are now a hopeless venture. Rather than

letting those feelings of despair overcome you because your

business loan was not approved, though, step back and examine

things carefully.

- Don't take it personally.

While some lenders can approve or decline a loan based on the

business owner's character, there are other factors involved

when your business loan is not approved, such as credit scores,

income, debt ratio, and the risk of the business. When a

business loan is not approved, it is most commonly due to one of

these four reasons.

- Be gracious.

If your business loan is not approved, be sure to thank the

lender for reviewing your loan application and proposal. Don't

leave on bad terms. You never know what the future holds, and it

could mean that you'll cross paths again, especially if your

loan approval was considered "borderline." Just because the

lender said "no" today, it doesn't mean that your business loan

won't be approved in few years, or even a few months.

- Ask the lender to review the details as to why the business

loan was not approved.

Without getting defensive, seek information from the lender

stating why the business loan was not approved. This information

will be one of your most valuable tools when applying for your

next loan. The more details you can get from the lender, the

more prepared you can be for the future. There may be instances

where you can correct the loan proposal or application when your

business loan is not approved, and eventually get approved for

your business loan with that same lender.

In the instance that your business loan is not approved, it's

time to not give up, but rather, to become resourceful. There's

more than one way to get the money you need for your business.

- Review your loan proposal in detail.

When your business loan is not approved, it's time to go back to

square one and look at your presentation pieces. After reading

through the details, put yourself in the lender's shoes. Would

you approve a loan to someone like yourself with the loan

proposal you're reading? If there is inadequate or incomplete

information in your proposal, such as a business plan that lacks

direction and goals, rewrite that information for your next

application. A business loan is not approved often because the

lender is not clear as to how the business will operate and

succeed. Additionally, examine your credit reports carefully.

Request copies of your reports from Experian.com, Equifax.com,

and Transunion.com.

Marks and errors on your credit report should be resolved

accordingly before applying for a loan again. If the marks

against your credit rating cannot be removed from your credit

reports, be prepared to tell the second lender that you approach

not that you are aware of these marks, and give they reason why

they are there. Offering these explanations to the lender show

that you are a responsible enough person to live up to these

errors, and a trustworthy enough person to tell the lender about

these marks before they find out for themselves.

- Examine the lender that you approached for the loan.

Is this lender one that specializes in business loans? Do they

cater to small businesses and start-up businesses? Do they offer

personalized service? If you approached a larger lender for a

loan and your business loan was not approved, that could be the

reason why it happened. Smaller banks and credit unions allow

you the opportunity to work face-to-face with the decision maker

who will approve or decline your business loan. Larger banks and

financial institutions do not offer you the opportunity to state

your case directly to the decision maker, which can increase

your chances of not being approved. In the event that you

approached a large bank, focus your second attempt on a smaller

bank or credit union if your business loan is not approved. If

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you currently have accounts or a reference from someone else

regarding a smaller bank, try that one first. Just because your

business loan is not approved with one lender, it doesn't mean

that another lender won't approve your application.

- Consider another type of loan if your business loan is not

approved.

Small business loans can sometimes be difficult to obtain no

matter where you turn or to what type of financial lender you

turn to, and in these instances, consider other sources if your

business loan is not approved. For example, if the loan amount

needed is $10,000 or less, consider applying for a signature

loan. If the loan is for a sizeable amount, or more than

$10,000, and your business loan was not approved, consider

refinancing your home in order to receive cash out for business

purposes, or offer other collateral for a personal loan. Home

equity loans can offer the lowest interest rates, but don't

forget to consider all other types of loans initially. Take your

time, and weigh all factors carefully.

- Contact the Small Business Administration.

The Small Business Administration offers guaranteed loans to

businesses meeting their criteria, and specifically, the SBA has

loan programs especially for women-owned businesses. Contact

your local SBA offices for information, or visit www.sba.gov.

The key to overcoming this financial obstacle if your business

loan is not approved is to become creative in these areas. There

is more than one way to obtain a loan, and if you truly have a

viable business idea, you should be able to find funding as long

as you've done your homework and developed an effective and

detailed business plan and loan proposal.

About the author:

Rebecca Game is the founder of Digital Women ®, an online

community for women in business. A 30 year entrepreneur and

dedicated to helping other women find business loans. Visit her

site: Loans

for Women

http://loans.digital-women.com