You’ve got a great business idea, but need funds to get started? Or you already have a small business, but you’re ready to expand and need a cash injection to make it happen?
It’s a common scenario, and one where many entrepreneurs and business owners will approach their bank for a small business loan. However, banks might not always approve those loans for a number of reasons.
In fact, Shopify statistics suggest that only 20% of small businesses qualified for the full amount requested.
So, what can you do?
Continue saving & paying off debts
One common reason for a bank turning down a loan is because you already have too much debt. They will likely tell you if that’s the case, which means you might need to keep saving and paying off debts until you reach a level where you can access more financing.
Improve your credit score
A poor credit score might also be the major factor standing in your way. The good news is that you can improve it with time and effort.
The Canadian government offers a few key tips for improving a credit score:
Try to use less than 30% of your available credit limit
Do not go over your credit limit amount
Aim to diversify your credit
Don’t request a credit check too often
Keep an older account open even if you don’t use it to improve your history
Improving your credit score could help, although it might be difficult for newcomers in Canada who haven’t had the chance to build up a credit history.
Try a different bank
Not all banks have the same lending criteria, so one might approve you even if another declined your application.
Do be careful to double-check the repayment terms and other contract details, as banks may charge a higher interest rate than standard if they feel they are taking on more risk.
Contact Community Futures Howe Sound
Community Futures Howe Sound is not a bank, but we do provide small business loans to those who can’t access financing from one. We would never suggest that you come to us first if you can get bank financing, but if you’ve been turned down, we’ll take a second look.
Our loans are character-based, which means that even if your credit history isn’t great, even if you’re new to the country, or even if you’re young, that doesn’t faze us. We lend to business owners, entrepreneurs, and would-be entrepreneurs who have great business plans and the dedication to make it work.
We offer the same rates as the banks, but with more flexibility. And when you pay off your loan, we re-invest that cashflow into the next business, so we can keep supporting the local community and economy.
If you’re interested in finding out more, you can book a free session for a chat about your business and plans.