Why Business Loans Get Rejected

GRAZIADIO IN THE NEWS

Forbes reports Pepperdine research found that the top reason banks rejected a small business business loan application was the quality of the applicant’s earnings or cash flow. Insufficient collateral and debt load were the next most common reasons, according to the banks surveyed. Smaller businesses often run into problems because their sales are generated by a small number of customers, or their earnings look weak. “A lot of small businesses, to be frank, really don’t manage their businesses in order to maximize earnings because they’re trying to minimize taxes, so they’ll have a lot of expenses,” Forbes quoted Dr. Craig Everett saying. “But of course, that hurts them when they go to sell the business or get a loan.”

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