Financial services are currently moving towards a technology-based system, making loans available online. Though applying for an online loan is much easier and quicker compared to a traditional bank loan, getting an online loan approval might be a bit tricky. We have listed 5 things that you might overlook when trying to get your online loan approval:
5 Things That Keep You From Getting Online Loan Approval:
1. Insufficient Incoming Sales
The financing company will scan your sales history to see whether there will be sufficient incoming sales. It is to make sure that you will be able to pay what you borrowed in the future. Especially with no collateral in the process, it makes sense for the financing company to judge and be strict with your incoming sales.
2. Poor Bank Balance
Poor bank balance does not mean that your business could not get online loan approval. Poor bank balance could be because of what your business offers, but it is possible that you have loyal returning customers that make you have sufficient incoming sales. However, sudden expenses may arise and if you have a poor balance on your bank account, it is risky for the financing company to approve your online loan. Hence, your bank balance is one of the factors that the lenders have to consider.
3. History of Defaults
A history of defaults is when your business has a negative payment marker on your credit file. This usually happens when your credit report shows a low or bad score. You may have failed to pay or refuse to pay your suppliers in the past. Or, you may have disputed over contracts previously. When a default occurs, the lender no longer sees the you as a customer, but as a debtor.
4. Existing Lawsuit
Your credit score won’t be affected if you are only being sued by another party, but it will be affected when you are losing a lawsuit. When a company is involved in a lawsuit, it means that the company is being claimed for some harm caused.
A business is considered over-leveraging when it has a high use of credit. It is carrying too much debt and unable to pay interest payments and other expenses. Overleveraged companies are most likely to be rejected since they are unable to pay their expenses. This may be caused by a debt burden from interest payments or any repayments.
Generally, those are some hidden factors that might influence your online loan approval. However, different lenders have different terms and considerations. Before you leave, you may also be interested in:
- Working Capital: Guide for SME Owners before Loaning
- Advice from a fintech startup: Don’t borrow if you only want to stay afloat
- 8 Mistakes To Avoid When Applying For Small Business Loan
- 10 Mistakes That Can Ruin Your Business Credit Score and How to Avoid Them
At Aspire, we envision a world where business owners have fast and simple access to the funding they need to grow. That’s why we’re on a mission to re-invent banking for SMEs across Southeast Asia.
Our current product provides SME and startup owners in Singapore with financial flexibility through a line of credit of up to S$150k. Which, can also be used to make business payments to enjoy 60 days free credit terms.