They named the most common reasons banks refuse to lend to small businesses.

Why Banks Refuse to Give Small Business Loans:

• trade term. Most often, companies that have been operating in the market for more than six months can count on loans. There are also proposals for a business “at first”, but most likely such an entrepreneur will not be approved by a large number, and if they are, then by a high percentage.
• Financial condition of the business.. The company must not have tax debts. In addition, if there is information about delays in the credit history of an entrepreneur or company, financing will be denied. SME Corporation also cautions against knowingly supplying the bank with unreliable documents.

What else should you take into account before applying for a bank loan:

• small font. It is necessary to carefully read the contract and pay attention to the details: the amount, the term, the security and what can be added to the contract.

Therefore, you must look at the total cost of the loan. Banks often offer additional services, such as insurance or guarantees. If the employer agrees with them, then the bank usually lowers the interest rate. However, it is worth evaluating what is more profitable: paying for additional services or paying for a loan at a standard rate.

It is necessary to take into account the repayment term of the loan. KMSP advises analyzing your financial situation and deciding which payments will be more convenient: long or short.

• debt burden. This is the sum of all the monthly payments that the company pays to the banks. If the credit burden is calculated incorrectly, the bank will call for the pledged property or you will have to take out a new loan to pay off the existing one.