Small Business Startup Loans – When banks say “no”

Let’s face it. Getting denied for small business startup loans is easy. Simply go unprepared and you’re well on your way to the dreaded denial letter. Often times, the bank officer will even give you an answer before you head out, and the official letter comes later. It’s knowing what to do with a “no” that can be the turning point of getting a “yes!”

When I work with clients, I can’t guarantee they’ll get approved. Not even the loan officer can promise that. However, I do prepare my clients for whatever outcome they get, so they can move forward with new tools in their belt.

Listen to clues

Before even applying for a loan, I encourage you to listen for clues. Often times, the loan officer will tell you what your problematic areas are. Listen… they’re valuable clues that can stand between you obtaining small business startup loans. If you’re able to resolve the issues prior to applying for a loan, I highly encourage you to do so. Not only will it improve your chances of receiving a “yes!” it could also improve the terms you receive on the loan.

Why were you denied?

If you are denied for a loan, one of the questions I encourage my clients to ask is why they were not approved. This isn’t a whiny “why?” you get from kids. Rather this is a true inquisitive why. You want to know, because being denied isn’t always the end. If you know they why, it gives you an opportunity to clean up the issue and return with a better application. Also, you can use the information you gather from a denial and go to another lender with your improved application.

Ask for tips

Remember, if you don’t ask, you don’t get. You can ask for tips before you apply and even tips if you are denied a loan. Again, you can use the information to come back with a stronger application or take your application to a different lender.

Final thoughts on small business startup loans

A bank “no” can be temporary. You just have to know how to play your cards right. The key thing to remember is all the information you glean from the loan officer is yours. It’s yours to make your loan application stronger. Also, keep in mind, you don’t have to apply for a loan if you’re not ready. I’m not saying delay forever, to the point you’re procrastinating or waiting for the perfect moment (and that rarely comes because imperfection is a way of life). However, if your loan officer is telling you “no” before it’s already hit underwriting, you might want to take a good look at what you’re presenting and how you can improve it. Also, understand that the requirements for one lender aren’t the same for all lenders. It might be an indicator that it’s time to got lender shopping.