Don’t panic, it happens. It’s common for companies all around the world to get denied financing. Now, you just have to figure out what to do when this happens. Here are some steps to take after getting denied financing, and then how to start your new journey somewhere else.
Step 1: Find out why you got denied
The first thing you should do when you get denied a loan is to find out exactly why you got denied in the first place. After that moment your lender denies you, you’re in control of what comes next. According to the Equal Credit Opportunity Act (ECOA), lenders are required to give you specific instructions as to why you got denied within 60 days of the decision. Under this act, a lender can’t discriminate any credit transaction based on race, religion, age, etc. Even when your lender provides these details to you, don’t be afraid to ask as many questions as possible. It is your job to figure out how you can fix this problem, but it is also the lender’s job to answer any questions you have that you still don’t quite understand. It’s the law!
Step 2: Fix it for next time
Once you find out why you were denied, correct your mistake before the next time you apply for financing. Some common, fixable mistakes may be: Poor credit report, not enough income, time in business, too short of a period at your job location, etc. Whatever the reason is, remedy it before you apply again. It not only wastes the lenders time, but also your own.
Dealing With a Poor Credit Report/History:
If the problem happens to be a poor credit report/history, then you should follow these steps:
- Ask off the bat: Once you find out you’re denied, ask your lender why immediately. You only have 60 days to find out.
- Search for clues: Make sure to get a free copy of your report and carefully see if you find any errors, such as a cancelled account, fraudulent activity, etc.
- Tell someone: If one of these errors occurs, then contact the credit reporting agency ASAP and they will help you out.
Step 3: Always double check
The last step before applying for a new loan/lease is to make sure everything that you went over is officially correct. At this point, you still have the power to ask any questions, comments, or concerns (if there still is any) to your lender. There’s no harm in making sure.
Step 4: Apply for a new loan/lease
Once you’ve traveled far and wide to get your questions answered, fixed your mistakes, and got your credit in order, don’t assume you won’t get approved for financing somewhere else. It is very common for companies to get denied for financing or leasing, but get accepted elsewhere. If you need to find another place that suits your business to get your equipment financed, there’s always a lender that can take care of you. As mentioned before, companies go through rough patches and denials all the time. By taking these steps to get your troubles out the door, you will be ready to move on to apply for a new loan/lease with a fresh start.