Need Funding?
This is a problem that nearly all startups face. It’s difficult for startups to find a lender. The strict lending regulations of traditional lenders limit access to their products due to risk. Your startup can get the early funding it needs by turning to trusted providers. QuickBridge offers loans to businesses with a minimum of six months’ operation. We’ll even start the conversation sooner.
Understanding the reasons why your business startup loan application is denied will help you to make informed decisions that increase your chances of being approved. You can contact us if your business has been operating for three months or more. We’ll look at some of the key reasons why startup loans are denied.
Why traditional lenders often decline business startup loans
Banks are generally not risk-loving. Many banks have a lending strategy that is based on this principle.
The Balance has also pointed out that traditional lenders tend to view new businesses as particularly risky recipients of loans . It is difficult to convince banks to change their perception. This is true even if your business plan is great and you’ve had good results early on.
Many factors that are used to evaluate potential small business loans tend to be against the circumstances many owners of companies find themselves in. Lenders may be influenced by a lack of funds, a poor credit rating, or a small business. If your business lacks collateral or capital, you’ll have to face more challenges.
Another option is the U.S. Small Business Administration
The U.S. Small Business Administration serves as a link between new businesses and a wide range of lenders. SBA backing helps lenders to feel more confident in lending money. It can also mean that the requirements are less stringent. The SBA can help you determine why your business’s startup loan application was denied.
SBA requires, however, that companies who are interested in using this program exhaust other funding options. It can take a long time to complete this process, especially for new business owners.
You should also be aware that every lender has their own rules, which can make the process more complicated. Securing a loan via the SBA program is not a guarantee.
Alternative Lenders and Startups
There’s an alternative to your startup loan being declined. Alternative lenders can be valuable for startups as they don’t have strict lending rules.
Keep in mind that specifics may vary from company to company. There is also no guarantee that funding will be available. Alternative lenders are more flexible, so there is more flexibility to negotiate a small-business loan agreement. Alternative lenders don’t have to accept the same reasons that banks do.
When you begin to consider alternative lenders, it is important to remember the following facts:
- A bank declining your application does not mean that an alternative lender will also decline you.
- Alternative lenders don’t require perfect credit, or even a long track record.
- A loan from a non-traditional lender can be used for almost any purpose.
QuickBridge is happy to work with companies that are just six months old. We take pride in finding solutions that help emerging companies during this critical growth stage. Contact us to learn more about our small business loans and how they can help your company grow.
