Getting approved for commercial loans can be tough. Luckily, some small businesses are being able to get a helping hand from lenders and banks. This can lead to a boost in economy and job growth. But some denials are still occurring, so why?
Applying for the loan can be the easy part. Waiting for the answer is what is that hard part. There are many reasons for denials, but one of the most common is insufficient revenue. Showing lack of cash flow is going to turn any lenders or banks away from wanting to help fund you. Your business needs to be able to prove that you have a successful cash flow and are deserving getting extra funding.
Other factors also play a role in approval of commercial loans. Lenders and banks will also take at all equipment that is available or being used. They will also look at the location of your business and the inventory quality. Having issues with any of these things can be reason for denial.
The stability and credibility of your business is also going to play a large role. These things can be proved with an excellent credit score. Coming up with a plan to present to lenders and banks about why the extra funding is needed and how it will boost your revenue is another way to avoid denial. Proving that you have a stellar financial track record and that there is good reason for the funding will almost always guarantee approval on all commercial loans.
Keep in mind that credit always play a large role in approval.
Banks strongly encourage a credit score closer to 700. Lenders are a little less lenient, but still prefer a credit score of at least around 650. If you are having a hard time boosting your credit score. There are many things you can do. Start by making all of your payments on time. Also, start off small. You can try to obtain small loans to help build your credit up so that you won’t get denied when you try applying for larger commercial loans. Planning for the future is always a good idea and you can do this by starting off small and building your way up to larger funding projects.
Really consider if it is the right time to apply because you never want to get denied.
If you aren’t quite ready to apply and get approved for commercial loans, it might be a good idea to wait. It is better to wait for the time to be right than to be denied all the time. Denial can really take a huge hit on your ego. It is best to try and get approved on your first try. So, take your time considering all of the benefits and negatives of applying at this time. Do plenty of research and build a solid foundation. And also, never get a loan when it is not necessary.
Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.
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