
Why you got declined for business credit (and what you can do about it)
Posted by SBC Team in Credit & LendingGetting denied for business credit is frustrating, but knowing why you were turned down can help improve your chances next time. From your cash flow to your utilization ratio, this infographic breaks down the common reasons small businesses are turned down and explains steps to take before reapplying.
BUSINESS CREDIT:
IF YOU GET DECLINED
When a bank considers your application for business credit, they take a close look at your history with creditors and billers—as well as reviewing your company’s financials. These are some of the reasons applications are declined.
YOUR CREDIT
REASON FOR DECLINE
Your payment history is unsatisfactory.
WHAT IT MEANS
Your personal or business credit report shows a pattern of late or missed payments.
WHAT YOU CAN DO
Always pay on time. It can take years for blemishes to fall off your report completely, but consistent, on-time payments will help.
REASON FOR DECLINE
You have a lack of established revolving credit.
WHAT IT MEANS
Your credit report doesn’t show a long history with credit cards or other creditors.
WHAT YOU CAN DO
Time is one of the most important factors in your credit history. The longer you can show a pattern of on-time payments, the better. Applying for a secured credit card is one way to build your history.
REASON FOR DECLINE
You’ve filed for bankruptcy.
WHAT IT MEANS
A past personal or business bankruptcy may affect your chances of securing new credit.
WHAT YOU CAN DO
In the coming months and years, work to improve cash flow, boost revenue, cut expenses and improve your credit score. You can also look into a Community Development Financial Institution (CDFI) loan, which may have different requirements.
REASON FOR DECLINE
Your business doesn’t qualify.
WHAT IT MEANS
Not every service or business is eligible. For instance, to qualify for certain credit products, Bank of America requires your business to be under current ownership for at least two years. And some products have minimum revenue requirements.
WHAT YOU CAN DO
If your business hasn’t been around long enough, try again when it has. Or consider a CDFI loan, which may have different requirements.
YOUR BANKING RELATIONSHIP
Getting turned down for business credit is frustrating, but knowing why it happened can help improve your chances next time.
To discuss your needs and find the solutions that work best for your business, please contact a small business banker.
Bank of America, N.A. Member FDIC
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©2018 Bank of America Corporation
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