Last year, of businesses trying to borrow less than £25,000, 40% were declined because of a poor credit score.
But those asking for more than £25,000? Just 3% were declined for the same reason.
What causes these big variances? Can you appeal against a thumbs down ?
Sub £25k underwriting;-
- is largely an automated process ( the computer says no) because of the huge volumes and low value of such applications.
- if any bank employee is involved in the underwriting of these small amounts they will be inexperienced junior managers working from essentially a call centre, so they have no direct knowledge of the applicant’s business.
- most applications will be from small businesses whose owners/ directors often lack the expertise needed to construct a loan proposal nor have the financial accounts to support it .
- directors don’t realise how much their business credit score is determined by their personal credit rating . Miss a credit card payment, be late with the mortgage one month, too many credit searches, and your business rating suffers!
Applications for £25k plus loans on the other hand;-
- are more likely to come from bigger companies that have a named bank manager who has at least met the customer and has the experience to take a broader view of the proposal
- often the company will be established with a well documented trading performance .
- and the management will be more familiar with how best to prepare and submit a loan application.
CAN YOU APPEAL ?
Yes you can , providing you do so within 30 days of being declined . About 30% of customers who do appeal, get the decision reversed!
Email me , with your application if possible, and I’ll review it to see if it can be improved and I’ll give you the appeals contact details.