In a country like India where a huge portion of the economy is supported by small-scale businesses, one might argue about ways with which we can support and promote them so that they are more independent and the industry of small businesses grows exponentially. Though this topology of business is huge, each day is survival, and decisions can make or break a small business. During this SBA loan services can be an important factor whether it is to save a business or take it to the next level, the support can be the difference-maker. Especially in 2-tier cities like Dehradun where financing might be difficult or of high interest, these business loans can be crucial.
There are many benefits to why one might consider SBA loan service with low-interest rates, long repayment terms, and manageable EMIs. They help business owners to make the correct decision and feel less burdened by the loan. But one thing to keep in mind is that getting an SBA loan application approval for these loans is no piece of cake and you have to be prepared to face rejection and mapping other solutions.
The approval rate of these may vary from 25% to 50% depending upon the business loan provider you apply to, thus don’t get discouraged by minor setbacks. Instead, work on the shortcomings and reapply with an improved application and maybe this time you might hit the jackpot. So, through this, we can aware you of the steps to take if you are not approved for an SBA loan: –
Learn from your previous mistakes and try to correct them.
The first step in a situation like this is to understand why your SBA loan application got rejected. There might be many reasons and try to avoid the obvious ones like having missing documents, shady transactions, etc. but the most preferable approach is to ask your SBA loan service directly about this issue. Out of those who got rejected half of them are not aware of the issues with their application and hence are clueless as to how to improve their chances in the next turn. Another important detail to this is that the lender is entitled to provide you with a written response as to why your application didn’t match their requirements from which you can easily deduce your options and if the requirements are achievable reapply successfully.
Looking at the common causes for which your application might get rejected can be
A low credit card score, in any case of loan your loan provider will want to look into your previous transaction history. Your credit score is your report card and the best way to make the first impression so make sure you have a decent score before you apply.
Your loan provider may not be interested in the industry for you to which you are applying and hence is hesitant to approve for a loan.
The loan approval will depend on your ability to pay back the loan so in case you are unable to provide enough revenue that ensures the lender or an equal collateral chances are the lender will not prefer such options.
Lastly, avoid any criminal history or civil disobedience.
Improve upon your shortcoming and strengthen your application for a reapply.
Now that you have looked upon the errors that occurred previously you can compare your options before you reapply for an SBA loan application. There might be some clear indication as you whether you should apply or not. Some requirements that are hard to crack and can’t be fulfilled during the time you have before you can reapply, so you have to weigh in your options and see if an SBA loan is the right option for you or not. Many lenders have a strict credit score or high collateral demand which is not possible for a very young business to provide. Thus, it’s best not to invest a lot of time and resources in such endeavors.
The paperwork that follows while applying or reapplying for SBA loans can be pretty hefty. You have you be ready with any financial document that might be necessary, legal documents for verification. With all this formality you also have to show that how are you going to spend the funds provided to you along with your business model. So, any document error can backfire your chances as these lenders tend to focus on how the borrower is paying attention to details. After making sure which option is correct, you prepare for the hurdles that await you.
To know more about SBA loan And credit score
Before you apply for an SBA loan application you must wrap your head around the concept of business credit score as many applicants pay zero to no attention to what their business credit tells about them. It can be a huge standout for you if you can achieve a good or eligible credit score that is required by SBA loan lenders. It is slightly different from your credit score which also comes under consideration, but the reason for its low score may have similar factors involved such as time of business, payment history, the scale of your business, risk in the industry, etc. But there are some easy ways through which you can work upon your small manageable payments to your suppliers and other creditors to improve your numbers as well as your chances.
Always have a plan B: SBA Loan
It is important to understand that an SBA loan might not be the only option available to you. Thus, you need to make decisions that could open up doors for your business. Various other alternatives can provide you with these options and are much more flexible than your SBA loan lenders. The most efficient method through which any business can grow is by bootstrapping and without external influence, many go for crowdfunding campaigns all these examples prove that there are businesses that grew with whatever they had and if you have a good and long history in the industry with a decent business score chances are you might find yourself eligible for a business loan.
These days many online lending options are available that are much more convenient than SBA loan options and could help you more specifically for your particular business. The only thing is to look out for the best alternative that will help you grow.
From previous steps, it is clear that no matter what happens giving up is not a viable option in any case scenario. All you have to do is understand your needs and situation then apply for a credit that suits you best and in case you fail the first time to learn from those mistakes and make better decisions.