Reasons Why Banks Deny Business Account Applications
Five Reasons Why Banks May Deny A Business Account Application
There are many verified reasons why banks will straight up deny businesses account applications. In some cases, the bank may have an adverse opinion of a firm because of its credit score or because of an application at one of the bank’s competitors previously and were denied a personal account there. In other cases, one may need to present more documentation about the business to convince the bank that they are a reliable business customer. Whatever the reason, this article will explore five common reasons why banks deny business account applications and what one can do to prevent this from happening in the future, according to Dr. Jordan Sudberg.
The business needs more revenue.
The most common reason many banks deny a typical business account application is if there needs to be more revenue. To get approved, banks want to see that the business has been profitable in the past or has projected profits in the future. If one can provide them with these figures, they’ll likely only accept the application if they think you’ll have enough money coming in.
The business owner has a bad personal credit score.
The most common reason a bank denies an account application concerning Dr. Jordan Sudberg is that the applicant has a bad personal credit score. Bankers look at many factors when deciding whether or not to approve an account, and credit score is one of them. When applying for a business account, they will pull one’s credit score and see what has been done in the past. If you have had bankruptcies or late payments, they will likely deny the application based on those things alone.
The business needs more assets.
Banks may deny a business account application because the business doesn’t have enough assets. This can be the case if one is an entrepreneur just starting out and has yet to accumulate any capital. The bank will want to see that the business has a certain amount of money to open a business account. If they see that the funds are depleted, they’ll likely reject the application as there’s nothing for them to lend against.
The business is in a high-risk industry.
One of the reasons why banks may deny an application for a business account is that the venture is in a high-risk industry. For example, if a business is involved in alcohol production, gambling or tobacco sales, then one can expect to have a hard time getting approved for an account. Certain industries will always be denied: adult entertainment and escort services, businesses involved with escort advertising, and any other business determined by the bank to be inappropriate for commercial credit. In addition, some companies may not qualify for an account if they’ve never operated as a company before or if they have failed to maintain their accounts and record-keeping properly. If these are problems that the company has had in the past, then one should expect rejection when applying.