Why Banks Say No
Finally, according to a CFIB survey of entrepreneurs who have applied for bank loans, here are the most common reasons the banks give them for why their application was rejected:
� 26.6%: Too much outstanding debt
� 26.6%: Lack of owner equity
� 24.8%: Insufficient cash flow
� 17.2%: Too new in business
� 13.7%: Poor industry conditions
� 11.6%: No reasons were given
� 7.8%: Products not considered profitable
� 4.1%: Inadequate business plan
� 4.0%: Environmental risk factors
These are the major warning signs that bankers will look out for before approving your loan. Before submitting your application you must try as hard as you can do anticipate and counter possible arguments in each of these areas.
One disturbing fact is that over 11% of entrepreneurs who get their loan applications rejected are not given a reason from the banks as to why this happened. The most important thing you can do if you get rejected is to listen to your banker. Always find out the reasons why you got turned down. Then ask what you can do over the next couple of weeks or months to improve your business so that they will accept your application.
Working with banks is not always an easy thing for entrepreneurs to do. They are, however, going to be important to the growth and success of
� 26.6%: Too much outstanding debt
� 26.6%: Lack of owner equity
� 24.8%: Insufficient cash flow
� 17.2%: Too new in business
� 13.7%: Poor industry conditions
� 11.6%: No reasons were given
� 7.8%: Products not considered profitable
� 4.1%: Inadequate business plan
� 4.0%: Environmental risk factors
These are the major warning signs that bankers will look out for before approving your loan. Before submitting your application you must try as hard as you can do anticipate and counter possible arguments in each of these areas.
One disturbing fact is that over 11% of entrepreneurs who get their loan applications rejected are not given a reason from the banks as to why this happened. The most important thing you can do if you get rejected is to listen to your banker. Always find out the reasons why you got turned down. Then ask what you can do over the next couple of weeks or months to improve your business so that they will accept your application.
Working with banks is not always an easy thing for entrepreneurs to do. They are, however, going to be important to the growth and success of
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For more information, visit www.EvanCarmichael.com. |
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