Part 1: Determine the Root Cause of the Denial
Even though banks routinely deny commercial loan requests, the experience can still be difficult for the small business owners and investors who need financing.
Fortunately, there are a few steps prospective borrowers can take immediately following a rejection that can put them in a better position to secure a loan from a different source.
If a bank recently denied your loan request, try taking the following 2 steps. First, determine the root cause of the denial. Then, use that information to determine whether or not you’re speaking with the right lender types.
By altering your application strategy and general mindset, you could create more opportunities for success in the near future.
Taking the First Step
The first step following a commercial loan rejection is also the most important – you need to clearly define the reason for the denial.
If a bank denies your loan request, be sure to ask them to explain their reasoning. It could be that they made their decision based on one of the following aspects of your request:
- Loan amount
- Poor credit
- Lack of credit history
- Insufficient cash flow
- Lack of documentation
- Insufficient collateral or assets
Once you understand the issue, you can begin working on the solution. The next step is to determine whether or not you can fix the problem in the near term. If not, you may need to expand your lender search to include more flexible, alternative lenders.
Stay tuned for part two of our series, where we’ll discuss different ways to determine whether or not you’re speaking with the right lender types.
Getting back out there
Rejection of any type can be difficult to bear – the key is to learn from the experience and make a stronger case for yourself in the future.
This is especially true when it comes to your commercial loan. Whether you need to adjust your request or the lenders you speak to, be sure to take the necessary action so you achieve your financial goals.
If you’re currently struggling to work with banks, it might be time to consider a customized loan solution from Commercial Direct. Simply visit our Loan Customizer and begin designing the loan request that best meets your needs.