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Banks Have a Lot of Reasons to Reject Your Small Business Loan

For a small business to grow into a big business, it needs a loan unless it has exceptional sales and profit margins. A small business owner has quite a few places where he/she can go with a loan request. Banks seem to be one of their options on most occasions. What these owners might not realize is that banks have recently developed a reputation for rejecting small business loans. It seems that banks are more interested in financing large businesses due to their benefits. A bank can come up with a variety of reasons to reject loan approval for a small business. Some of the common reasons are as under:

Reasons for Banks to Reject Your Small Business Loan

Credit History

One of the barriers between you and the business loan is credit history. When you go to a bank, they look at your personal as well as business credit reports. Some people are under the impression that their personal credit does not affect their business loans. But that’s not always the case. A majority of banks look into both the types of credits. One of the aspects of credit that matter a lot to the banks is credit history. The length of your credit history can affect your loan approval negatively or positively.

The more information banks have at hand to assess your business’ creditworthiness, the easier it is for them to forward you the loan. However, if your business is new and your credit history is short, banks will be unwilling to forward you the desired loan.

Risky Business

You must be aware of the term high-risk business. In fact, lending institutions have created an entire industry for high-risk businesses to help them with loans, credit card payments, etc. A bank can look at a lot of factors to evaluate your business as a high-risk business. Perhaps you belong to an industry that is high-risk per se. Examples of such businesses are companies selling marijuana-based products, online gambling platforms, and casinos, dating services, blockchain-based services, etc. It is imperative to understand that your business’ activities can also make it a high-risk business.

For example, your business might not be a high-risk business per se, but perhaps you have received too many charge-backs on your shipped orders from your customers. In that case, the bank will see you as a risky investment and might eventually reject your loan application.

Cash Flow

As stated earlier, your credit history matters a lot when a bank is to approve your loan request. While having a short credit history increases your chances of rejection, a long credit history isn’t always a savior too. Any financial incidents on your credit history that do not favor your business can force the bank to reject your application. One of the most important considerations is the cash flow of your business. When you have cash flow issues, you are at risk of receiving a “no” from the bank for your loan.

Your cash flow is a measure for the bank to know how easily you return the loan. If you are tight on cash flow, how will you manage the repayments? However, cash flow is one of the controllable factors for you. Find ways to increase your revenues and lower your expenses. Once you have the right balance, you can approach the bank for a loan.

The Debt

A mistake that small business owners often make is trying out too many places for loans. They will avoid going to the bank first but get loans from several other sources in the meantime. Once you have obtained your business funding from other sources, it makes sense to return it in time. Approaching the bank when you already have a lot of debt to pay is not advisable at all. Do keep in mind that the debt you or your business owes affects your credit score as well. In short, the bank does not even have to investigate to know your debt. An overview of your credit report can tell the story.

The Preparation

Sometimes, your business is doing fine, and your credit score is in good shape as well. However, what’s missing is a solid business plan and proper preparation for loan approval. If you haven’t already figured out, banks require you to present a lot of documents with your loan approval request. Here are only some of the documents you will have to present to the bank to get approval for your loan.

Income tax returns
Existing loan documents
Personal financial documents
Affiliations and ownership
Business lease documents
Financial statements of the business
You have to be exceptionally careful when these documents and presenting them to the bank. Any discrepancies can result in loan rejection.

Concentration of Customers

This one might come as a surprise to some, but a lot of banks consider this aspect of your business seriously. You must not forget that loans are banks’ investments. Businesses that approach the banks are their vehicles to multiply their money in the form of interest. If the bank senses that your business does not have the potential to expand, it can reject your loan request. Think of a mom and pop shop in a small town with a small population. If it only serves the people of that town and has no potential to grow further, a rejection is imminent.

In this particular case, even if the business has considerable profit margins, it relies on its regular customers for that. The bank might see it as a returnable loan but not as an investment opportunity.

Make Money from Home – Start a Home Based Business Even with Limited Cash and Skills!

You wish to start a Home Based Business, Make Money from Home, be your own Boss but unfortunately what is preventing you from getting started is that you don’t have much money or special skills. This is a problem that is in the back of the mind of many would be entrepreneurs who wish to make money from home. Let this not be a barrier and dampen your enthusiasm. You certainly can get started if you set about in the right manner.If you are highly motivated and passionate about achieving your goal of being a successful home based business entrepreneur and make money from home, first you have to do some self searching and self assessment. Next you have to get your priorities right.
“Good things don’t come to those who wait, they come to those who want something so bad, and they can’t wait for it.”–Ashton KutcherEvery person is blessed with certain skills or qualities they are good at.
You have to identify yourself with those skills and qualities you think you are good at, happy with and feel confident about, especially with respect to home based business. If you are unable to identify them yourself, get the help of your friends.Skills can be categorized under, Craft Skills, Service Skills and Professional Skills.Craft Skills.Some examples are: Carpet cleaning service, Carpentry service, Wall Paper Service, Candle making, Home sewing etc.
To make money from home and be successful in this business category you should have qualities such as being good with your hands, ability to repair things, being artistic etc.Service Skills.Some examples are: Care Giver, Child Care, Senior Day Care, Wedding Planner, Party planner, Food Delivery Service, Catering etc.
Qualities that will propel you to success and make money from home are: you should enjoy meeting new people, talking with strangers, helping people irrespective of other considerations.Professional Skills.Some examples are: Business Consultant, Financial Advisor, Interior Decorating Service, Photographic Service, Video Production, Secretarial Service, Transcription Service Book-keeping etc.
To establish yourself in this home based business and make money from home you should have professional knowledge or skills in a particular field. You should be creative, have the capacity to remember facts and figures, make estimates and solve problems.Having identified the home based business, you should ensure the following:1. The home based business should not cost you much money to set up.2. There has to be a need for the Product or Service in your region for you to make money from home.3. Your home based business offers your customers a product, service or value that will satisfy them and keep them happy.4. Another aspect that is often overlooked is that it should be a home based business where you do not need to spend too much money in advertising your business. It should be such that you could start by advertising with “Flyers” and mainly by word of mouth. Word of mouth is very powerful. If you render good service and give something that is unique, the message will spread very fast in your community and your home based business is bound to succeed and you will make money from home.5. The most economic and easiest way to get started is to start operating the home based business from your home, apartment or condominium. You could always move out to a spacious house or building later.6. Most of these home based businesses do not need much money to get started in a small way. In fact some of them require only your skills. Financial help and support from family members or a small personal loan from the Bank should not be difficult to obtain. In addition the Small Business Admininistration provides all necessary assistance to start a home based business. Necessary information could be obtained from http://sba.gov. Even credit card facilities are taken advantage of to make money from home by skillful home based business entrepreneurs.Lack of money or skills should not act as a barrier to start a home based business. If you are really passionate about your business and want to make money from home, it is your determination and the courage to succeed in your home based business is what matters most.”Believe that problems do have answers, that they can be overcome, and that YOU can solve them.”- Vincent PealeOften the difference between a successful person who is able to make money from home and another is not that the former had better skills, ideas and money but the courage that he had, to take the first step and implement his home based business ideas.

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Your Internet Home Based Business – Tips On How to Set Up One

Setting up an Internet home based business is like starting an actual business. Some people may think that since a business is operated online and from home, it is a smaller-scale venture compared to real businesses. This, however, is a misconception. Some Internet home based business are even bigger and are experiencing more growth than real ones. Starting and operating an online business venture may be a bit challenging when you are new to the field and is used to the conventional business and marketing world. However, there are also many resources on the Internet that you can get your hands on in the actual setting. The difference lies on how you take advantage of these unique Internet resources and make them work for you. Here are some tips on how you can successfully set up your Internet home based business.

PLAN AND SET GOALS

As in any business venture, the key to a successful Internet home based business is to plan. Set goals; determine what you want your business to achieve, and prepare concrete action plans on how you will achieve your business goals. Plan what you are going to need, in terms of investment and tools. In terms of investment, you might need to upgrade your computer for a better one, or you might need to purchase another computer to sustain your business operations. The investment requirements will differ based on the nature of your Internet home based business. In terms of tools, since there are a lot of resources available to you on the Internet, plan which resources can help your business. Do you need to set up a blog site, or join forums to advertise your site? If so, in what way should you advertise? These are just some of the things you should already lay out in detail before you even get started.

PUT YOURSELF OUT THERE

Once your Internet home based business is under way, the next thing you need to do is to advertise! There are plenty of ways to advertise on the Internet. You can set up a blog and write articles about your products. You can join forums and post website ads in various sites that your target customers often visit. You can exchange links with other sites to drive traffic to yours. You can post pictures and videos of your products on your site, your blog, and in forums. Also, master the art of search engine optimization to lure people to your website, and thus, to your product. The more visitors you get, the more potential customers you have!

BUILD A CUSTOMER BASE

Just as any actual business will not succeed without a loyal customer base, you also have to build a customer base for your Internet home based business. It is important to build a relationship with those who transact business from you. Chances are that they can even bring in more customers because of their contacts. Social networking is yet another concept that is very popular on the Web, and it will pay to take advantage of the social networking sites and communities online. There are a lot of social networking sites on the Web, such as Facebook and Myspace, which can help increase your customer base. When you have a loyal customer base, coupled with a social network that continues to bring in more and more customers, your Internet home based business will be unstoppable!

The arena where your Internet home based business will perform in may be different from the conventional marketing world, but the same rules applies. No business will be successful without careful planning, focused goals, a loyal customer base, and a source of customers. Don’t make the mistake of thinking that once you put your business on the Internet, it will grow on its own. The Internet is as wide as the world we live in, and your Internet home based business will only be successful if you’re ready for a challenge.