Banks have become an institution deemed “too big to fail,” but that doesn’t seem to make them the least bit interested in helping other businesses succeed. In fact, banks are now approving loans at an all-time low rate, which means that would-be entrepreneurs often can’t find the cash they need to start their work. What’s insane about the way that they do business is that they have ridiculously high standards as to who is “deserving” of a loan. Here are five reasons why your business may have gotten rejected by banks – and why it’s total garbage on their end.
- Your personal credit score is too low. It’s true, and it’s somewhat idiotic: banks check borrower’s personal FICO scores, even if the loan is a business loan. The standards are also very high. So, if you don’t have at least a 720, don’t expect to actually get a loan. Is this fair to you? Absolutely not, because your own personal history shouldn’t have a bearing on the future of the company that could help you make ends meet.
- You’re a “fresh” entrepreneur. Though there are exceptions to this, most banks won’t lend to new business owners. They assume that you don’t know what you’re doing, even if you’ve been in business for as long as 5 years. If you don’t have 7 years of experience, don’t expect people to give you a loan – it’s just that simple. Obviously, this isn’t fair, because there are plenty of well-off businesses that just need more funding that haven’t been in existence that long.
- They don’t like your industry. If prejudice wasn’t any more obvious, then let this be a testament to how incredibly fickle the banking word can be. Even if you have perfect credit and are asking for a reasonable amount, they may say no based on this alone.
- You don’t have collateral, or don’t want to sign over collateral. Collateral, especially business items or your own home, shouldn’t be put up for grabs by banks. This could be a potential life ruiner, so it’s best if you avoid it altogether.
- They maxed their quota. Sometimes, banks just don’t give loans – just because they feel like there’s not enough in it for them. If this is the case, you can’t really do much about it.
Rather than deal with banks who reject you at a drop of a hat, choose to work with a merchant cash advance group that cares. At CPS, we can give you the money you need at a rate you’ll love.