Where To Get Big Business Loans If Banks Decline You

Where To Get Big Business Loans If Banks Decline You- Business, Loands, Banks

Did a bank just decline your application for big business loans?

Business owners use loans to keep their business running. Getting a loan could even be the last resort to salvage a business from bankruptcy. 

However, banks are strict regarding their policies and requirements in giving out loans. Many applications are denied every day because they think that the borrower is not worthy enough for the loan. 

It’s therefore important to understand the different requirements businesses must meet in order to get loans approved to increase your chances. But even this cannot guarantee an approval. 

Fortunately, there are alternative options that can be considered when your big business loan application has been denied. 

Alternative Options If Banks Decline Your Big Business Loans

Banks are usually strict regarding the required qualifications when giving big business loans

But don’t let this falter you. 

If banks deny your loan application, there are still other ways of to obtain a loan. Before we discuss the solutions to consider when your application is denied, let us first talk about the reasons why big business loans are accepted.  

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Reasons Why Big Business Loans Are Accepted

All businesses will encounter hardships that are more often than not caused by insufficient cash flow or revenue. 

To keep your business running, getting a loan should be your first option.

Regardless of the type of business, companies undergo the same process when applying. Big businesses, however, will find themselves at an advantage in this situation, particularly if they’re applying for a big business loan. 

Big Businesses Mean More Assets

With big businesses, financiers usually still feel at ease even if the business is unable to pay for the loan. The reason for this is huge amount of assets big business have at their disposal that can either be used as collateral or sold off to get the money required. 

Not having a large business with only a few assets declared could be one of the reasons why your business loan application may be declined. 

Larger Companies Have A Longer Business History

A company’s history serves as a basis for assumptions, and performance of what the company will be in the future. The likelihood of those assumptions being correct (or not) is referred to as risk.

If the risk is lower, the company can have better terms. 

When it comes to big businesses that almost always have a larger and longer history, financiers know that assumptions for a big business’ performance are likely to have lower risks involved.

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Big Businesses Have Established Reputations

Big businesses come with a solid and established reputation, and having such a reputation can already serve as a sort of guarantee. It would be difficult to even imagine that a big business with a strong established reputation would not perform well.

Knowing that a business has an established reputation will make it easier for banks to trust that business. 

 

 

Banks As the Main Source For Big Business Loans

Banks are the main source to apply for, and be offered, big business loans

But acquiring a large business loan from a bank is not easy. In fact, banks have been shown to have a low approval rate – 20% to 40% – when it comes to business loans.

Here are three simple things to think about before you apply for a big business loan. Make sure that: 

  1. Your paperwork is in order.
  2. Your credit history is good.
  3. You have substantial collateral.

 

However, fulfilling these three points above doesn’t guarantee a loan approval. It only ensures that your chances of receiving a large business loan from a bank will be fairly good.

It’s also important to note that banks require long processing time for this kind of loans. Applications could take weeks, or even months. 

Four Reasons Why Banks Reject Your Big Business Loans

We have already tackled the reasons why banks accept big business loan applications in the earlier section. 

The reason you are probably reading this article is because you have found discovered a completely different response from the bank – rejection. 

If you are still pondering on your application, this will serve as a guide before submitting. 

So why do banks reject business loans?

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Business Has Poor Credit History

The first thing lenders look for in a business loan application is the business’ credit. 

Having a good credit score means that the owner of the business has a solid handle when it comes to personal and business credit. It also means that the business has a good reputation in handling their debts.

But if a poor credit shows up in the application’s credit history, it’s highly likely that banks would lose all confidence. 

A poor credit is simply a sign that the borrower or the business does not prioritize the repayment of their debts.

Loan agreements come with financial obligations. Having a subpar credit rating has the implication that the borrower or the business will not be able to meet these obligations.

Business Has Issues With Its Cash Flow

Businesses have one thing in common: to make money. 

Having money moving in and out of a business over a specific period of time is what we call a cash flow. It represents the “health” of the business and the possibility of its future growth.

If a company is not earning any money, then it will result in serious cash flow problems. This is one of the common reasons why banks are denying a business loan application.

A business that has a serious cashflow problem is a huge risk to lender, who would automatically assume that the borrower is not capable of repaying the loan.

Business Has Limited Collateral To Offer

Collateral is commonly required for any business loan. The collateral supports the size of the business loan a company wishes to borrow.

Banks may still end up rejecting a business loan application if a business doesn’t have enough collateral, despite having a fair cash flow and profit. 

A collateral is required especially for companies that have defaulted on their previous loans. So if that company has a limited amount of collateral, it’s highly likely that the company will face certain challenges securing bank loans.

There are some instances where businesses don’t have enough knowledge about the kind of assets they can use to serve as collateral for the business loan. It would help businesses to research about the kinds of assets that they can use as collateral to figure out what among their assets can be used for the business loan.

Difficult Conditions

Although a business is running well with minimal debts and good cash flow, there’s still the possibility that it will face industry-specific difficulties. The local, state, and federal ordinances where the business stands are among these difficulties.

In addition, there are also seemingly unrelated factors like the local climate conditions, which may also influence the approval or denial of the business loan application.

But regardless of these difficulties, some banks just outright refuse to lend to businesses that are under certain industries.

 

Alternative Options When Banks Reject Your Big Business Loans

Now, if banks reject your big business loans, don’t stop searching. There are alternative options where your loan application would be accepted. 

There are still other financial institutions that you can turn to if you really need to be approved for big business loans.

Private Equipment Lenders

Private lenders are one source of big business loans. They include a variety of potential partners. These partners may include high net worth individuals, family offices, and even private investment groups. 

A business’ collateral is what they exclusively look for, rather than the business’ credit. Their role is to buy the equipment for you as a third party and then you can lease it from them.

Private lenders can provide short-term equipment bridge financing and even hard money equipment financing solutions. Although they cost more than banks, they excel in speed and creative structures for big business loans. They can also close a deal with big businesses in a matter of days. 

Private Working Capital Lenders

Private working capital lenders have approval rates as high as 90%, which often depends on the company’s situation and financial health. 

Apart from accessing the needed capital, there is the ease of obtaining the funds because of their fast funding process. Big businesses can have more flexibility when it comes to the use of funds and reduced documentation requirements. 

There is also little to no covenants and an all-around creativity of private lenders that think ‘outside-the-bank’.

Financial Institutions

Financial institutions are alternative lenders that are also commonly referred to as FinTech or peer to peer lenders. They can have a maximum approval of $1,000,000.00. They offer affordable and fixed monthly payments for big business loans.

There are also those that don’t require any hard collateral and upfront fees yet it still provides competitive rates for big business loans.

 

Final Thoughts About Big Business Loans

Loans are a common concern when it comes to businesses, big or small. In this article, we discussed the different reasons banks accept some loans and deny others. 

When it comes to big business loans, we have realized that larger companies tend to get accepted because: 

  1. They have more assets at their disposal, which can be used as collateral or sold off.
  2. They have longer and larger history. 
  3. They have established reputations that are assumed to be a guarantee to banks that they will be able to pay.

We also addressed why banks reject big business loan applications.

When bank loans are denied, it’s not the end of the world. There are still alternative options for you: private equipment lenders, private working capital lenders, and financial institutions. These options ensure that your application has a higher chance of approval. 

If you have other concerns regarding your big business loan you can call Trust Capital USA at (866) 458-4777.

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Where To Get Big Business Loans If Banks Decline You- Business, Loands, Banks

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