Learn how to make the best use of the loan money you now have, and how to avoid a loan decline.
Loan Approval
Once your loan is approved, the real work begins. You’ll want to make certain that your business adheres to sound financial and resource management in making use of the loan funds; strictly abides by the terms of the loan; adheres to its payment schedule, and proves to be a worthy credit risk. Remember, chances are you will need additional working capital as your business expands. Establishing a good credit record will prove instrumental in obtaining additional credit when the need arises.
Loan Decline
If you loan is not approved, don't give up. There are other sources of available funding, described above, that you may want to pursue. If you’re a first-time borrower, you might want to seek the advice of an experienced professional, like an accountant or financial advisor, to review your loan proposal and offer helpful feedback. Various business support groups have members who could also counsel you on how to improve your loan package. The Service Corps of Retired Executives (SCORE), which is sponsored by the U.S. Small Business Administration, may be another resource to draw upon.
Credit cannot be denied on the basis of sex, marital status, race, age, national origin, or religion. This applies to you and to the people you deal with.
If your application for business credit is rejected, you can find out why by sending a written request to the lender within 30 days after you have been denied credit. The lender must give you the specific reasons in writing within 30 days after you ask. If you disagree with the reasons, discuss your concerns with the lender. Complaints can usually be resolved at this level.
If your business is small (less than $1 million in gross revenues), the lender must keep records of your credit application for at least a year after telling you of the credit decision. If your business is larger, the lender is required to keep your credit application for only 60 days after a credit denial. If you do not request reasons for denial within 60 days, the lender may destroy your records unless you request that records be kept longer, or ask for a written statement of the reasons for denial.
If you believe your rights have been violated, you may wish to seek legal advice on how to sue a lender who violates the ECOA. Or you may wish to contact the Federal Trade Commission through its Web site at www.ftc.gov or by calling toll-free 1.877.FTC.HELP.
back to top
About BBBTips™
BBBTips™ is a trademark of the Council of Better Business Bureaus, Inc. (CBBB) used for information provided to assist consumers and businesses in making informed and intelligent decisions. BBBTips™ are developed in partnership with the Better Business Bureau Consumer Education Foundation, Inc. and made possible, in part, through the generous financial and technical support provided by corporate sponsors that are members of the CBBB and of the Better Business Bureau where the sponsor is headquartered. As a matter of policy, the CBBB and Better Business Bureaus do not endorse any product, service or company.
10/20/2004
