It’s almost
impossible these days to keep a small business running with money from your own
pocket. To meet up with financial commitments, entrepreneurs usually approach
their banks for loans and it is rejected. As such, Jumia Travel shares reasons
you may not be granted your business loan request.
1. Lack of consistent cash flow
Banks tend to favour small and medium-scale businesses that have a
steady flow of revenue coming in every month. If your business can’t demonstrate
this consistency, your loan request will be denied.
impossible these days to keep a small business running with money from your own
pocket. To meet up with financial commitments, entrepreneurs usually approach
their banks for loans and it is rejected. As such, Jumia Travel shares reasons
you may not be granted your business loan request.
1. Lack of consistent cash flow
Banks tend to favour small and medium-scale businesses that have a
steady flow of revenue coming in every month. If your business can’t demonstrate
this consistency, your loan request will be denied.
2. Insufficient collateral
To get a loan, you need a
commensurate collateral. This may not be a problem for large businesses that own
large assets, but it can very difficult for small businesses.
To get a loan, you need a
commensurate collateral. This may not be a problem for large businesses that own
large assets, but it can very difficult for small businesses.
3. Personal guarantees
Your bank needs personal guarantees that
you won’t default when it comes to servicing your loan. This is a very risky
position for enterprises struggling to stay on top of their monthly
expenses.
Your bank needs personal guarantees that
you won’t default when it comes to servicing your loan. This is a very risky
position for enterprises struggling to stay on top of their monthly
expenses.
4. Not enough operating history
Banks give preference to
businesses with a track record of good performance. The truth is they don’t want
to fund a business that has been operating for a short time and hasn’t sustained
a certain amount of success and credibility.
Banks give preference to
businesses with a track record of good performance. The truth is they don’t want
to fund a business that has been operating for a short time and hasn’t sustained
a certain amount of success and credibility.
5. Weakening industry
Operating a small business or startup in
an industry that your bank perceives as weak or in fast decline will limit your
chances of getting loans from your bank.
Operating a small business or startup in
an industry that your bank perceives as weak or in fast decline will limit your
chances of getting loans from your bank.
6. Economic concerns
Banks will not lend money to a business if
they feel that the current economic conditions are unfavourable for getting the
money back in a timely manner. This is simply because they do not want bad
debts.
Banks will not lend money to a business if
they feel that the current economic conditions are unfavourable for getting the
money back in a timely manner. This is simply because they do not want bad
debts.
