Why Banks Deny Loans to Small Businesses

Starting a business is one of the most rewarding, yet difficult endeavours to undertake. The road to profit is very challenging. Business owners need a great deal of money to launch their venture. They depend upon commercial lending for financing. However, many times loan applications are rejected by banks.
Here’s a list of reasons a business loan can be rejected.

  • Bad credit

    Even though not everyone has the best credit, as far as lenders are concerned, this just isn’t an excuse. Poor credit is simply a sign that a borrower, or their business, does not prioritize repaying their debts. Credit score of the borrower is very important criterion for money lenders to decide whether to accept or reject a loan offer. Most banks typically won’t loan to a business owner whose personal credit score isn’t above a certain threshold (typically about 680).

  • Not enough collateral

    All business loans require collateral. Unfortunately not all businesses have sufficient collateral to support the size of the business loan they wish to borrow. Another obstacle is the price depreciation of certain collateral. Know the value of your collateral before you ask the bank for the loan.

  • Under-capitalization

    Borrowers often make the mistake of under-capitalizing their business loan application. Your personal and professional resources including fixed assets, retained earnings, and the even an owner’s equity, can be attached if required to secure repayment of the debt. Do your homework; know what capital you have on hand. Know what you can pledge and use to grow your business and repay the bank’s loan.

  • Cash flow problems

    Lenders see no reason to offer money to a business that has serious cash flow problems. Banks want to see that businesses have enough money to make monthly loan payments in addition to covering rent, payroll, inventory and other costs.  After all, if a business isn’t even making money to begin with, then there is no need to hand it a business loan in the hope that is generates growth. There has to be adequate cash flow available to repay a loan. Most bank term loans are not ideal for start-ups or very young businesses. They typically look for a few years of revenue generation. Start-ups can apply for SBA loans (which are loans made by a bank with a portion guaranteed by the US government). Most large banks have SBA loan departments, so be sure to check with your local branch.

  • Lack of preparation

    Many businesses simply aren’t savvy about the application process and believe they can walk into a bank, fill out an application and get approved for a loan. Before applying for a bank loan, businesses should have a written business plan, financial statements or projections, personal and business credit reports, tax returns and bank statements. They should also have copies of relevant legal documents including articles of incorporation, contracts, leases, and any licenses and permits needed to operate.

  • Difficult conditions

    Even if a business has excellent collateral, credit, and is well run, there is still the possibility that it will soon face industry-specific difficulties. For example, a lender may be hesitant to lend a business loan to a transportation company in the wake of rising fuel costs. The lender may expect that the soaring costs of fuel are just going to overtax the transportation company and make it difficult to grow or generate a profit. Outside influences are always considered prior to a loan approval or decline. They can include industry experience of a borrower, a business’s location, local or regional economic trends, competitors etc. In addition to these, seemingly unrelated factors, such as local climate conditions, may also influence an applicant’s approval or denial.

These reasons are warning signs to look out for on the road to getting a business loan. Even if borrowers achieve success and borrow business loans, they still have to successfully run their business and payback their lender. While not all ideas need financing to get started, getting a business loan is a great aid to launching a new company.

What’s In a Name?

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Creativity is the essence of the tech world and it is evident even with the names of tech companies. There is a story behind the names of most of the companies.

Here’s a look how some of these well-known tech giants got their names:

  • Apple – Steve Jobs liked apples a lot. The other reason he named his company ‘Apple’ was that “Apple” was ahead of “Atari” in the phonebook and he used to work at Atari.
  • Amazon – Bezos wanted his book retail site to be so quick and easy that it seemed like magic. The site went online in 1995 with the name of Amazon, taken from the Amazon River for being the biggest river. Clearly, Bezos had big ambitions right from the start.
  • Google – Google took its name from a deliberate misspelling of Googol, the word that represents 10^100, or a 1 followed by 100 zeroes. Why this? Simply because founders Sergey Brin and Larry Page wanted to convey the huge amount of data they intended to make available.
  • Microsoft – The company was officially established in April 1975, with the name coming from a combination of “microprocessor” and “software” – which is fitting given that they were creating software for the Micro Instrumentation and Telemetry Systems’s (MITS) Altair 8800.
  • Oracle – This name started as the code for a project that co-founders Larry Ellison and Bob Oats worked on for the CIA. It was a database that was supposed to be able to answer any question about anything.
  • Mozilla – In 1994, when a team at Netscape sat around to think of names for a new browser to take on NCSA’s Mosaic browser, what they were looking for was something that would crush the competition. What they looked to was Godzilla. Combining Mosaic with the movie monster brings you to the current day name of Mozilla.
  • Asus – The name is derived from the mythological Greek winged horse Pegasus. According to the company’s own explanation it embodies the strength, purity, and adventurous spirit of this fantastic creature, and soars to new heights with each new product it creates.
  • Lenovo – The word is a combination of Le and Novo, meaning new in Latin.
  • Skype – It’s a combination of “sky” and “peer-to-peer”, shortened to skyper. The name ‘Skyper’ was already in use, so the new name became ‘Skype’.
  • Twitter – Founders first thought of ‘twitch’. But ‘twitch’ was not a good product name because it doesn’t bring up the right imagery. So, they looked up dictionary and found ‘twitter’. The definition was ‘a short burst of inconsequential information,’ and ‘chirps from birds.’ And that’s exactly what the product was.
  • eBay – The website started out as “AuctionWeb,” a part of the personal website of former Apple software engineer Pierre Omidyar. The website took off, and Mr. Omidyar decided to spin it off into its own entity and name it afterhis consulting firm, Echo Bay Technology Group. When the domain name echobay.com was taken, he switched it to ebay.com.
  • Verizon – According to Verizon’s corporate history, the name is a combination of the Latin words “veritas” and “horizon.” Veritas refers to truth and reliability, while horizon signifies forward-looking and visionary.
  • Blackberry – This name was coined in 1999 because the keys on the device resembled the drupelets on the fruit.

Bluetooth, Wi-Fi…..How These Terms Were Born?

Certain terms, which were once part of technical jargon, have taken place in our normal vocabulary. Ever wonder how these terms originated?  You will be surprised to find out the facts behind it.

  • Bluetooth – Bluetooth comes from the name of an ancient Danish king called Harald Bluetooth. What’s significant about King Bluetooth is that he united different regions and allowed them to communicate with each other.

 

  • Wi-Fi – Wi-Fi, as it turns out, doesn’t stand for anything. Phil Belanger, a founding member of the Wi-Fi Alliance, has gone on the record as saying the term was nothing more than a catchy word created by a brand consulting firm.

 

  • Troll – While the imagery of a goblin-like cave monster seems awfully apt, there’s actually more to the term than meets the eye. The word “troll,” you see, is also a verb meaning “to fish by trailing a lure or baited hook from a moving boat.”

 

  • Wiki – Credit for the first wiki is commonly given to a guy named Ward Cunningham, who came up with a site called WikiWikiWeb. Ward was wooed by the word wiki when he traveled to Hawaii, where he saw a “wiki wiki bus”. “Wiki” means “quick” in Hawaiian.

 

  • Ping – Ping, in its current form, traces back to a Unix-based network administration tool created in the early 80s. The program sends a data packet to a network-connected computer and then measures how long it takes for the system to respond.

 

  • Spam – Spam, according to most popular accounts, comes not from the questionable canned meat but rather from a 70s-era Monty Python sketch.

 

  • Cookie – The most common explanation suggests the term comes from Unix. In Unix, a “magic cookie” refers to a chunk of data that’s passed between two programs.

 

  • Bug – In 1946, Grace Hooper joined Harvard, where she traced an error in the computer due to a moth trapped in it. This bug was carefully removed, the word ‘bug’ is still being used to describe defects.

 

  • Hotmail – Its founder tried all kinds of names ending with “mail”. Later he chose “Hotmail”, as it contains all the letters “HTML” – the markup language used to write web pages.

 

  • Java – “Java” was selected from a list of suggestions, primarily because it is a popular slang term for coffee, especially that grown on the island of Java. As the programmers drank a lot of coffee, this seemed an appropriate name.

 

  • Python – Named after the television series “Monty Python’s Flying Circus”.

 

Is It The Right Career For Me?

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Choosing the right career can be difficult, but having a defined career direction helps when finding a job. Generally, many people know their passion early on in life, but there are many people who discover their interests as they get older. With a little hard work, planning and serious self-introspection, you can easily set yourself on a path leading to a fruitful and fulfilling career.

Whether you’re trying to decide where to look for your first job or pondering a possible career change, here’s what you should consider when thinking through this important decision:

  • Your natural talents – Knowing your natural talents is key to choosing the right career. Utilizing your talents in the work you do will bring success as well as recognition. You should try to find out what do you really enjoy doing and should apply those skills to a job.
  • Your interests – What topics do you read about in your spare time and what classes do you enjoy in school? Your career doesn’t have to be your passion, but it shouldn’t bore you either.  If you’re not interested in the duties or responsibilities that come with the career you choose, it’s going to show. The lack of interest, passion and motivation often lead to poor productivity, which can adversely affect your advancement opportunities, salary and even job security.
  • Personality – Are you an introvert or an extrovert? Introverts require time alone to recharge, while extroverts thrive on social interaction. Most people are close to the middle of the spectrum and will be most happy in a career that balances time alone with social interaction.
  • Lifestyle – If being home with your family at around the same time every day is important to you, a career that sees you on the road or requires you to work overtime frequently might create problems and leave you unhappy. If your career threatens a certain aspect of your lifestyle that’s exceptionally important to you, that might not be something you can easily adjust to, and it can ultimately affect your performance at work.
  • Future opportunities – While you may not want to be a company president one day, you may want to advance beyond an entry-level job, or you may want to branch out and pursue a different job within your career field. It’s always wise to find out where a career path may take you. Ask what the job placement rates are in the major you’re considering, and find out what graduates are doing several years after finishing the program.
  • Demands and expectations of the career – Most careers have certain conditions that are associated with work. You need to find out what the conditions (stress levels, work hours and travel, physical environment, level of responsibility, etc.) are that will likely be associated with the types of work you’ll be doing. Can you handle not only the work but also the conditions that you’ll probably face?

Considering the above factors, make sure you choose your career based on – You! Make choices that reflect your personality, your abilities and motivation, your desired lifestyle, and your circumstances. And whatever choices you make, think beyond the present and take actions accordingly.
Once you make your mind, register yourself on TheGongzuo.com to search jobs in your chosen career. Many large companies are looking for passionate employees who make a difference!