It’s boot strap time
Pulling yourself up by the bootstraps after a loan denial can feel a bit like trying to fly. Wait, we do get around pretty well in those 747s… A’hem, my point is this kind of rejection can sting, and leave one in a state of, well, malaise. But, there are some things you can do to improve or change your situation. It might feel counter-intuitive, but there is a positive side to this difficult experience. As a business owner, you’ll begin to re-evaluate your goals, re-organize priorities, and gain clarity on financial oversights. This is good. The most common reasons for being denied a loan of course are lack of income and poor credit. Your focus at this point should go to those long-term solutions of pulling in more revenue and making payments on time. However, life doesn’t always wait for us to gather our business-sense. If this sounds like you, here are a few quick fixes (use caution) that you might consider.
A larger down payment
Offering more money up-front could help with the “no go” deal. This means lenders will decide to give you lower monthly payments because you’re borrowing less. It’s a win win deal, because there is less risk for the lender and you’d be saving money in the end.
Find a cosigner
Adding someone else’s good track record on a loan application gives another with poor credit a fighting chance at a good chunk of money. Making sure your friend or family member’s income is solid and can handle the extra financial stress is imperative. As a cosigner, their responsibilities will be equal to yours in every way. This means if you default on repayment, the lender will find both you and your cosigner legally responsible.
Offering lenders something of value if you cannot repay a loan can work in your favor. Types of collateral might be: A car, jewelry, a house, or even animal stock from a ranch. It is of course important to realize the risks involved with this type of loan application. Be sure you would be ready and willing to let go of such things, if say, something unforeseen occurs–like becoming ill. Lenders have and do all the time, take repossession of items just like these which are bound in contracts by law.
Usually, the best decision is to get your credit score back to a healthy number, by paying back past debts. In business, there are always risks. With these type of loan applications, it’s best to give them a good deal of thought. If you find yourself wondering if a financial risk is right for you, contact thedigitalCPA. It’s our job to help businesses rise to the top…and we love what we do!