So your small business loan request was denied by the bank? Now what? That’s a question that many entrepreneurs and small business ask themselves after they are turned down by a bank. The good news is that you don’t have to feel discouraged or defeated after having your small business loan request denied. You may have other options. One of the first things you should do after being denied for a small business loan is ask the bank why. Don’t settle for a generic denial letter. Call the bank and ask for a detailed explanation of the reason for denial. Searching for other small business loan sources with the help of a small business loan broker can also be very helpful. You may be able to find a lender who will approve you through a small business loan broker. This is because small business loan brokers often have developed long term relationships with lenders. They refer hundreds or thousands of clients to those lenders every year, making those lenders a lot of money. Those lenders trust their brokers and will sometimes fund deals they refer that other banks have denied.
Search for Other Small Business Loan Sources
There are many ways to obtain a small business loan for your business. Banks are not the end all be all. After learning why the bank denied you in the first place, you’ll have a better understanding of what you need to do to qualify. Once you have a better understanding of what you need to do to qualify, you can work on it. You can also seek out other financing sources that may not be as strict as traditional banks.
A Small Business Loan Broker Can Help
To save time, I suggest working with a small business loan broker to obtain financing for your business. The best small business loan brokers work with different lenders that offer different types of financing. They also understand how all of the different types of small business loans and financing options work for small business owners. They will be able to clearly explain the differences between financing options so you will know what you are getting into before you accept anything.
How a Small Business Loan Broker Can Help You “Find Capital”
Small business loan brokers can be very beneficial to you on your journey to acquire capital for your small business. The best small business loan brokers are experienced and well-connected in the financing world. They also have access to direct and indirect lending sources all over the country. Experienced, well-connected small business loan brokers who are ethical and have your best interests in mind should be able to help you secure funding. Small business loan brokers often get a bad rep and people tend to wonder why the need a small business loan broker. The fact of the matter is, the best small business loan brokers will help you simplify the process of obtaining capital. This is significant because raising capital can be difficult to obtain if you don’t know what you’re doing. The best loan brokers do this in 4 ways:
- They educate you on the many funding options available to you. There are tons of different funding options available to small businesses and thousands of sources of funding. The best small business loan brokers will educate you on the many different types of funding and help you determine which type of funding is going to be the most appropriate for you based on your unique situation.
- They analyze your personal credit, business credit (if applicable), and your financial situation to determine what you’ll most likely get approved for. All lenders have criteria in place that you must meet to get approved for funding. Many of those lenders will take a look at your credit reports to determine your creditworthiness and your financial data (e.g. bank statements, check stubs or w-2’s and tax returns) to determine your ability to pay back whatever you borrow. A small business loan broker who views this information before you go to a lender can tell you what you will qualify for after analyzing the information. This will give you a leg up with most lenders because you’ll already know what they expect of you. All you will have to do at this point is prepare yourself to get approved by meeting the criteria set in place by lenders.
- They refer you to the most appropriate lender based on your personal (or business) credit history and your financial situation. After a small business loan broker evaluates your personal (or business) credit history and your financial situation, they should be able to determine the most appropriate lender(s) to refer you to. The most appropriate lender(s) would be the lender(s) that will most likely approve you based on your current situation. This will save you from having to search for and apply to multiple lenders (that may not be appropriate for you) on your own.
- Persistence. Sometimes obtaining capital depends strictly on sheer persistence. The best small business loan brokers will continue to help you secure capital, even if the initial sources they refer you to don’t work out.
Overall, the best small business loan brokers will help you minimize the amount of time you spend searching for capital. Since the best small business loan brokers are already connected to a variety of different lenders and they know and understand what type of borrowers those lenders are looking for and they can match you with the source of funding that’s most likely to approve you. Working with a small business loan broker could increase your chances of getting approved for a small business loan, the first time you apply.
How to Identify the Best Small Business Loan Broker
All small business loan brokers are not created equal. Some are only out to make money off of you. That’s why it’s important to do your due diligence before choosing the small business loan broker you will work with. Find out how long they have been in business and ask for verifiable references. You should be able to reach out to the references if necessary. Also conduct a Google search to find out if they have any complaints online. If you find any complaints, speak directly to the small business loan broker about them. Sometimes people can write unwarranted complaints online so it’s best to ask the small business loan broker what happened (before jumping to any conclusions). Using LinkedIn to find out more information about them might also be helpful. Most of the best small business loan brokers online have a LinkedIn profile with recommendations. At the end of the day, use your best judgment. If what the small business loan broker is telling you sounds too good to be true, it probably is.
LenCred is an Expert Small Business Loan Broker
The LenCred team specializes in helping entrepreneurs and small business owners obtain unsecured business lines of credit. However, they also have access to other financing sources. They can help you figure out what will work best for you based on your unique situation. If you’ve already been denied by a traditional bank and you are unsure why, LenCred may be able to point you in the right direction. They will analyze your personal credit history and let you know if you qualify for unsecured business lines of credit. If you don’t, there may be other types of financing they can recommend. Depending on how long you’ve been in business (amongst a number of other factors), you still may be able to qualify for a small business loan.