Turn Business Credit Denials into Approvals

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May 13, 2024

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If your business loan application was denied, you’re not alone—about one-third of applications are rejected. But there’s hope and steps you can take to improve your chances next time.

Here’s how to turn things around in your favor:

•Analyze your business profits. Higher profits increase your chances of loan approval. Therefore, look for ways to boost profits by cutting unnecessary expenses and streamlining operations. This will make your business more attractive to lenders, minimizing the chances of denial.

•Evaluate your assets and liabilities. A balanced sheet is essential. If you carry too much debt compared to your assets, it’s time to address this imbalance to make your business more appealing to lenders. Lenders might see your business as a risk if you owe more than what you have in assets. Work on balancing or reducing your debts.

•Review your payment history and credit profile. Lenders consider how you’ve managed past obligations. If you’ve been denied credit, closely examine your business credit score and payment history. Remember, most credit information is reported for only 2-3 years, so past mistakes can be mitigated by maintaining a positive payment track record and ensuring your credit information is accurate.

•Lenders look at how you’ve managed your debts. If you’ve been denied, check your credit score and history. Since credit bureaus typically report for only 2-3 years, a few positive changes can improve your standing.

•Maintain healthy bank balances—your business bank account balance matters. Low balances can be a red flag for lenders. Aim to keep at least $10,000 in your business accounts to demonstrate financial stability.

In a nutshell, a denial indicates that lenders view your business as risky. However, it isn’t the end of the road.

Understanding where the concerns lie and taking corrective action can improve your business’s financial health and creditworthiness.

If a lack of credit history is an issue, build a solid credit profile.

Identifying and correcting these issues can improve your business’s financial health and increase your chances of getting approved.

About the Author

Robert Jackson is currently the CEO of Alln4fam Consulting Inc.

At Alln4fam Consulting, he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.

For more information on business credit scoring, business credit, visit: https://alln4businesscredit.com/