A business or a corporate cash loan is a tool that helps an entrepreneur to have the advantage of working capital and that can help an individual run the operational activity of the business.
However, a person who is working in a business that has a weak balance sheet or a person with having poor credit score for, it’s quite tough to get a business loan and thus feel the trouble to make the working capital needed for the business.
A lender will look at many parameters before lending, and through that, the eligibility of the borrower is verified. A person who needs a business loan needs to check the following criteria that need to be followed for the effectiveness of the business loan approval.
Top Factors that Reject the Business Loan Eligibility
When it comes to getting a business loan, the first thing that one needs to consider is eligibility, and in this criteria, one can face rejection from multiple lenders. Here, one can find a loan agent through the One Andro app, and they can provide clarity to their client about the reasons why their loan is getting rejected.
- Having a Poor Credit History
The first thing that a person can face for loan rejection is poor credit history. It can happen when an individual has never taken a loan, and for that reason, a bank doesn’t have enough track records they fulfill the credit history criteria.
It’s one of the reasons why a person is having difficulty in the loan approval process. For the approval of a business loan, a promoter must have a credit history to verify their track record.
- Inconsistent Cash Flow in the Business
A business cash flow is one of the key factors that determines how much a company generates cash in each business cycle. For example, a person can invest regularly in business and get profits from each sale. Still, it’s not converting into cash, and the profit takes a lot of time to translate into cash, thus creating a need for working capital.
Having a working capital crunch is expected as some business takes higher payment cycles. Still, if a company can’t recover the cash from sales and takes a lot more time than the industry standard, in that case, the lender stays away from that company as it might not increase the stake of the business. It can fall into trouble during repayment.
- Low Repayment Capacity
The next thing that can be a reason for loan rejection is the lack of repayment options for the company or the promoter. For example, if one is looking for a business loan either to increase the growth of the business or to start a new venture, the lender checks the payment criteria.
A person who has an existing business in a different field has a better chance to get a business loan as they have higher repayment capabilities. Here, a lender also checks the ITR history along with the debt that one has with the existing loan, and all these factors play a key role in determining whether or not one can repay the loan.
- Eligibility Condition Based on Documentation
The next reason for rejection is the improper documents and that can be of the business or the promoter in case the venture is a proprietorship. For example, if a person is dealing with the wrong address in the identity proof or some of the license documents are still not available for the business, then one can face the wrath of loan rejection.
- A Newer Business
The age of the business is also a factor in the availability of business loans. If a new business has started, then it’s tough to get a business loan. In those cases, one can start with a personal loan and build the venture for a few years, and then again can reapply for a business loan and get the approval.
One can also login into the One Andro DSA app or some other third party loan agent platforms where they can find partners who can guide them before taking a business loan.
Taking care of the following factors, one can increase the chances of getting a business loan that will help a promoter to increase the revenue of the business.
