If you recently applied for a loan in the UK and you got rejected, it is not the end of the world. It is an opportunity for you to go back to the drawing board and draft a new plan and proposal to ensure you get the loan this time around.
Reasons why banks reject loan applications in the UK
- The business was too risky
- The individual did not have sufficient collateral
- The individual seemed incapable of repaying the loan
- The business plan was not convincing
- The individual did not put up a good presentation
There are many other reasons why banks in the UK reject loans, but these are some of the most common of them. If a bank or credit facility has rejected your loan application for any reason, the following is what to do next:
Reconsider the business idea
It’s awesome to have ideas, but sometimes that idea that seems like a million gazillion pounds in your head may not exactly happen that way in real life. You should understand that business is a very risky venture and if your idea will require a lot of risk, a bank will likely reject it. Reconsider your business idea and eliminate some of the risk factors.
Look for a lender that does not require collateral or provide sufficient collateral
Some banks and lending facilities in the UK require that the applicant present collateral before applying for the loan. If you suspect that the bank you applied to demands collateral and you did not provide adequate collateral in the first instance, then you should either provide collateral sufficient to serve as lien or apply only to a bank that does not require collateral to give you loans.
Demonstrate to the bank how you intend to repay
Sometimes banks will not give out loans because they suspect the borrower will be unable to repay. You need to demonstrate to bank by explaining the measures you and your management team will utilize to repay the loan. Convince them of the capability of your excellent team, and their dedication to ensuring the loan is repaid. This will assure the bank loan officials of your ability and encourage them to grant you the loan.
Learn how to give presentations and get your paperwork right
A lot of the process behind getting loans from the bank is in your ability to convince. You are convincing the bank loan officials on paper and also in person. Failure to give a good presentation will result in the bank official not having faith in the capability of the idea you are selling or your own personal acumen. If the bank official herself is not blown away by your idea, she will think no one else will, and that will influence her not to grant your loan application.
If you carry out all of these steps mentioned above, there is very little chance your application will be denied. There is the possibility however that even after applying a second time it could, but this should not stop you from trying again. Persistence is key.