“I’ve done everything that the application form asked for! Why am I getting rejected for my SME loan?”
You are ready to make a leap of faith.
Finished with the paperwork and the application forms.
And you got rejected.
Isn’t it something you want to avoid?
Was there something wrong with your loan applications? Is it a ”It’s not you but me” situation? But what did you do wrong?
Let’s check these possibilities that may be the cause of rejected SME loan application.
1. No collateral
There are two types of collateral.
No proven asset will make your business a high-risk business. The bank will not see you as an entity that is able to pay back the bank without collateral.
You cannot borrow if you do not have collateral.
However, you can try for Malaysia guaranteed loan.
-CGC – Credit Guarantee Cooperation Malaysia Berhad
-SPP – Syarikat Jaminan Pembiayaan Perniagaan
With guaranteed from the government, the bank will have a lower risk to give you a loan.
2. Application or paperwork is outdated
This is one of the most common mistakes that people make when applying for a loan. The audits or the reports of your business should be less than 18 months to the application.
Not only that, you need to be sure that your applications have enough supporting documents, business plan, three to five years of tax returns, account statement, credit report, and sometimes even legal documents as well.
Since not all SME loan applications are the same, pay close attention to the requirements that you need to fulfil so that your application is not missing anything.
3. Your business is too young
In short, your business does not have enough credit history to qualify for SME loan. Therefore, judicious bookkeeping is important.
Make sure you and your vendors always update any transactions so you can have a healthy credit record.
Lenders prefer to approve a loan if you present enough evidence that your business has enough cash flow to service new commitments.
That is why having a clear report of your cash flow is crucial.
4. Your business is risky
Some businesses are considered risky because it has a high failure rate.
Not all lenders are interested in giving loans to a high-risk business because there is a chance that you might not be able to pay or even failing to grow your business.
Operating a restaurant is considered a risky business.
Why? Because of its high start-up and operating costs, slim margins and other operation costs.
If you are running a restaurant wanting to grow your business with SME loan, you should look for lenders, grants, or other methods of financing that suits your services.
5. Bad credit score
Even if your business has been going for a while, your own personal credit history could be a major factor why your applications got turned down.
If your personal credit doesn’t look like it is managed well, there is a chance that you might not be able to manage your business loan. To avoid this, you need to have a good credit score before applying.
If you want to read who can give you an SME loan, you can read here.
So do you run a restaurant or café and you want to expand your business?
If you read number 4, you know that your business is risky. But if you look at number 3, you notice that you need to have a clear cashflow to convince your lenders to approve our SME loan.
Wondering how can you get a clear cashflow?
And how can you get a report on how you manage your restaurant?
All is possible with Slurp! POS inventory management
It gives you access to:
-Calculating Cost of Goods Sold (COGS)
-Determining Food Costs and Controlling Wastage
You can track sales report, order, employment, and inventory management.
You can analyze your budget so that you can see your own cash flow. Hence you can easily see how you are spending your money, not to go over budget for your restaurant.
With Slurp! you will have a clean report for your SME loan.