Loan Turndowns: Getting Approved for Business Funding

August 9, 2018 by CNH Finance, LP in category “Financing”

Roughly 25 percent of new and small businesses are approved for loans. That is a staggeringly low number when one considers the millions of entrepreneurs that try to launch or grow their dream businesses in the United States. While the economy is improving, loan turndowns are still surprisingly high. However, there are a few things entrepreneurs should be aware of when seeking financing for their businesses.

Loan Turndowns and Perceived Risks

Banks are rooted in a system that is not as agile as the marketplace they serve. Some banks are still reeling from the Great Recession of the mid-2000s. However, instead of changing their own practices to allow for more successful businesses and competition, banks have put in more restrictions and requirements to weed out all but the most successful and established businesses. For instance, a newly launched sole proprietorship is more likely to experience loan turndowns. Banks view sole proprietorships as high-risk businesses, citing a potential lack of sales, hardship, or death of the owner as reasons why a loan will not get repaid. Mid-range business credit scores also result in loan turndowns. Not having high enough credit ratings is viewed as a big risk by banks, even though new and small businesses never have perfect credit when they first start. One of the most baffling reasons for loans turndowns is launching a new business or attempting to expand an existing company. Businesses need funding to get off the ground and to grow, but by virtue of being new or small, they cannot access the capital they need to be successful.

Get the Funding Your Business Needs

Applying for a loan almost seems like an exercise in futility when you look at the many reasons for rejections. The time and effort it takes to go through the loan process, only to receive a rejection, can be downright frustrating. But in this progressive economic landscape, business owners do not have to rely on loans, or further take a hit to their credit ratings to get the funding they need. Smart business owners have been using asset based lines of credit to get the working capital needed to sustain and grow operations. Asset based lines of credit provide funding according to the value of business-owned equipment, vehicles, facilities, and receivables. This revolving line of credit can be set up quickly and efficiently so businesses can access a renewable source of funding without any of the red tape and rejections of traditional loans.

CNH Finance offers businesses a viable alternative to traditional bank loans. If you are tired of rejections, or would rather sidestep the possibilities of arbitrary loan turndowns, contact our offices today.

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