Running a business can be a daunting task because sometimes experienced business persons face difficulty while operating a business. The most common problem that businessmen face is availing a loan for their business. A business loan can be savior to tackle several problems while running a business either it’s to maintain cash flow or expanding a business.

However, businessmen need to undergo a loan application process while they “Apply For Business Loan“ but not every loan application gets approved by the lending institution especially if you need the funds to start a new venture rather than having an established empire. Here, we are listing some of the common troubles that are responsible for your loan rejection.

→ Low credit score: As soon as you borrow from a specific lender, CIBIL will assign you a credit score that denotes your credit worthiness. The higher the score, higher will be the chances of your loan approval as lender finds you a potential borrower who will be able to repay the loan on time.

A credit score above 750 is assigned to be high credit score and it will be perfect if you have near to perfect credit history to attain such a number. However, a poor score is the main reasons why lenders reject your business loan application. In case you get to secure a loan with poor credit score then lender might charge you high rate of interest on loan amount.

→ Not enough collateral: A business loan is categorized under secured loan where a borrower has to provide any personal asset as collateral against a loan. Sometimes, a business person has not sufficient asset which can be pledged as collateral.

To exemplify, some service-based business do not require any machinery or inventory these days so they might have hard time providing any asset to get approval on their business loan. Therefore, small and medium size businesses find collateral as major hurdle as compared to large scale businesses.

→ No consistent cash flow: It will be one of the biggest troubles faced by the small scale businesses when they “Apply For Business Loan Online“ or offline because they do not have sufficient cash flow. A steady cash flow in business ensures the lender that you have enough money to make the loan repayments on time.

If any business has low cash flow, the lender will get concerned that business owner will be unable to repay the loan on scheduled time. A business that doesn’t have regular cash flow then the loan will get rejected by the lender until and unless they provide sufficient collateral to pledge as security.

→ Short operating history: Every lender want a business person provide a proven history of their performance to judge whether they are in good position to make the repayments in a fixed tenure. Therefore, inefficient operating history work against you while getting an approval on your business loan.

Hence, getting a business loan is not easy if you are also suffering such unfortunate situations in your business. If you need a business loan operate your business smoothly then work on such things before availing the funds.