Funding Solutions

Rejection Is Not For You: How to Turn Lenders “No” to a “Yes”

Two men shaking hands to secure the agreement

Do you always get a ‘no’ reply from your lender every time you apply for a loan? Don’t give up yet; you can overcome this rejection using the same resilience you use to overcome rejection from clients, vendors and prospective investors.

To get the best possible response from your lender, you should first understand the reasons why you always get a negative reply. This could include choosing the wrong loan or lender, having poor credit, lack of adequate cash flow, lack of collateral or lack of a business plan. It could also be as a result of unfortunate timing or lack of proper information.

So, what can you do to increase your chances of getting a ‘yes’ instead of a ‘no’ from your lender? Be curious and persistent. A no always means that a yes is possible. Observe the following before and during the application period.

1. Choose The Right Loan And The Right Lender

Your loan application approval begins before making the application. It starts with the decision you make. If you are a small business person, you need to start the process by researching on the available lenders in the market, what they offer and their terms and conditions as well.

Most traditional banks, for instance, have stringent terms and requirements which might be unfavorable to you if you are still starting. Luckily, there are several online lenders with favorable conditions. Apart from the lender, make sure that you settle on the best loan which meets your specific financial need. Also, ensure that the interest rate is favorable and the repayment period favors you too. Above all, make use of referrals while researching. A good choice will turn the lenders ‘no’ into a ‘yes’.

2. Build A Good Credit History

The credit history is undoubtedly one of the significant requirements for assessing a business or personal loan. It assures the lender that you will manage to repay. Although some online banks give credit without considering the credit history, it’s always advisable to make sure you have a good credit score. How does one build a good credit score? By clearing and repaying your loans in time.

3. Have A Plan

You should have a well-crafted plan related to why you need the loan. It increases the lender’s confidence on you, and therefore lack of it can lead to an automatic denial of your loan request. Work on your plan, and make it as clear and professional as possible. The lender would like to see how organized you are, and so a well-articulated plan showing your revenues will be a plus in your loan application.

4. Have A Good Cash Flow

Even if you have a good credit history, your lender might be hesitant to offer you a loan if you don’t have a persistent stream of income in your company. If your margin is tight, then the lenders will assume that you have no room for extra payments including the on installments.

Good cash flow means that you can comfortably settle your expenses and also repay the monthly installments for the loan you are applying for. Cash flow is, therefore, a vital determining factor which the lenders consider before they decide to approve your application.

5. Have Collateral

Most lenders ask for collateral as assurance that they can get back their money should the borrower default. Collateral is the property or assets that the lender asks for to be used as a security for the loan. It could include a piece of land, a car or even whatever assets your lender requests you to provide.

Collateral is particularly significant if you don’t have a persistent income flow, and can help you to turn the lenders no to a yes. In many cases, the lenders decide the type of collateral that you should provide them with.

Although all of the above-discussed points could influence your lender’s decisions on the loan application, the right thing to do is to ask for. Avoid general answers, but instead, go for the specific details from your lender in regards to the loan. Seek to know what contributed to the rejection, and then ask about what you can do to get the approval. Also, remember that every lender is different, so don’t assume you will get a general answer from different lenders.

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