In recent years, the biggest reason for the failure of startups is the lack of business loans and support from SME financing. The three common reasons behind not getting SME financing include -
Lack of balance sheet - In the past, the business used to make transactions in cash to evade tax, which leads to not having proper documents to show the growth of their company. But after the demonetization, some businesses maintain transactions online so now they can show the business growth that helps in a business loan approval. Still, most companies do transactions through cash, so they don’t get business loan approvals easily.
Also Read: What challenges small businesses face in getting SME financing?
Unable to communicate business needs - Sometimes, entrepreneurs are so focused that they forget to think from a lender’s perspective. Thus, language barriers between the lender and the entrepreneur can be a significant reason for loan disapproval. In case your lender fails to find the figures or ratios he is looking for then it can be a drawback too.
Lack of planning - Sometimes, a business might skip out the capital funding expenses from the loan, so it becomes difficult for startups to sustain in the long run. Besides, most companies don’t calculate their competitiveness, bandwidth and market size while making plans which also leads to the disapproval of business loans. These situations happen due to lack of planning; an entrepreneur might not get a loan.
Lack of balance sheet - In the past, the business used to make transactions in cash to evade tax, which leads to not having proper documents to show the growth of their company. But after the demonetization, some businesses maintain transactions online so now they can show the business growth that helps in a business loan approval. Still, most companies do transactions through cash, so they don’t get business loan approvals easily.
Also Read: What challenges small businesses face in getting SME financing?
Unable to communicate business needs - Sometimes, entrepreneurs are so focused that they forget to think from a lender’s perspective. Thus, language barriers between the lender and the entrepreneur can be a significant reason for loan disapproval. In case your lender fails to find the figures or ratios he is looking for then it can be a drawback too.
Lack of planning - Sometimes, a business might skip out the capital funding expenses from the loan, so it becomes difficult for startups to sustain in the long run. Besides, most companies don’t calculate their competitiveness, bandwidth and market size while making plans which also leads to the disapproval of business loans. These situations happen due to lack of planning; an entrepreneur might not get a loan.
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