Many small businesses’ continued existence or growth hinges on a sustained influx of funds. It is why the ability to get a business loan is so critical. Yet, for some reason, many small and medium enterprise (SME) business owners find getting this type of loan challenging. What could be wrong? We’ll be shedding light on that here.
Possible Reasons Keeping You From Getting an SME Loan
Some variables that may impair your ability to get a decent small business loan are;
Bad Credit and a Poor Credit History
We cannot overemphasize the value that potential lenders place on the shape of a borrower’s Credit Score in Malaysia. It is because most lenders see your Credit Score as a direct assessment of your credibility. Consequently, if you have a low Credit Score or a less-than-stellar credit history, you may be deemed high risk. As such, you can increase your chances of getting any loan you apply for simply by improving your credit score.
Insufficient Cash Flow
In commerce, cash flow describes how much funds you can readily access to meet the repayment of your loan. Regarding the level of importance to lenders, this variable is second only to your Credit Score. And, just like with your credit history, if a lender adjudges you to have poor cash flow, they become less inclined to extend your credit. You can get the upper hand by putting your business in a more comfortable position, cash flow-wise, before making any loan application request.
No Or Poorly Drawn Out Business Plan
The finance world is by order and extensive planning. That’s why people with a clear and detailed business plan are usually better positioned to secure any loan they apply for than those without. Not only does the presence of a business plan mean you know what you’re doing, but it also gives a lender the confidence that you’ll be able to pay back whatever you’re about to borrow. Although you can go in fully armed with an explanation of what you plan to use the loan for, this isn’t always enough. You stand to get an even greater edge if you have a business plan that contains details like your company summary, data on your local market, available products, and other relevant financial information.
Fielding Too Many Loan Applications At Once
On one level, it makes perfect sense to apply for as many loans as possible and then make a final decision, depending on which ones come through. However, because all your loan applications are in a central database, every lender has access to this information. And, as most lenders consider too many applications a major red flag, you’re only likely to get all your applications denied. So, try only to field one application at a time.
Finally, your business matters to you a lot, and that’s why you’re going through all this trouble. So, if you need more help securing an outstanding SME loan, you should read this for more information.