The fact that a SME approaches an organization to request financing does not ensure that it will be granted, as there is always a chance that it may be rejected owing to the company’s financial history.

The financial context for SMEs

According to the document Basic indicators of credits to small and medium-sized enterprises (SMEs) in Mexico, by March 2021 the total credits to companies were 2,317 billion mexican pesos, and the participation that financing to SMEs had, within the credits for the non-financial private sector, it was only 9.6%, lower when compared to other types of credit.

Accessing a SME loan is crucial for small and medium-sized businesses. But getting this kind of funding can be challenging, whether you need it for a capital emergency, to pay off debt, or to grow or modernize.

Why is it possible to refuse to give small and medium-sized businesses (SMEs) credit?

Given this likelihood, it is preferable that you are aware of the reasons why a firm applying for a loan may be turned down after a credit investigation.

Low Solvency

The most important factor in assessing a credit application may be a company’s capacity to repay a loan, interest and all. The lending company must recognize the potential in its clients.

If your business is struggling financially, think about introducing more products and services, automating and streamlining procedures, and determining the optimal cost-benefit scenario for each expense that needs to be incurred.

Insufficient guarantees

Guarantees are alternative sources of payment in the event that there is not enough money to pay debts, and they may be taken into account when asking for a loan.

In order for creditors to view your credit analysis with confidence, it is advised that your business project be so strong that you can rely on a guarantee that recognizes the potential of your business idea.

Many debts to pay

It’s conceivable that the financing will be rejected if the financial institution to whom you have asked for credit determines that your firm has a significant amount of debts and that there may be risks of non-payment.
It is ideal to create a plan to pay off your company’s present obligations, modify your budget, and start saving before applying for a loan so that your cash flow increases and your financial standing does too.

CRiskCo’s API to support SMEs

If you play the part of a lender, the CRiskCo API can be very helpful for supporting SMEs that might not have a long credit history. This interface can give you a clear picture of the applicant’s current situation as well as a potential future scenario, allowing you to adjust the ideal loan amount and the right conditions while still taking care of your business.

Discover the CRiskCo technology, which will enable you to make the best loan decisions without putting your company at risk while assisting SMEs with growth potential.