Loan rejected, what went wrong?
This morning I read the report published by Samenwerkende Kredietunies, the Association of Credit Unions.
And probably, just like so many of my colleagues, the first thing I did was to look at the percentage of loan applications that were approved.
In this report, 15% of the applications were approved – from which we can deduce that 85% were rejected!
The total number of loan applications discussed in this report was 245.
Sorry, but that just makes me want to dig deeper!…
Although we will probably never come into contact with this 85%, I am certainly curious about the plans that were rejected.
Even we still learn something new every day, and certainly from rejected plans.
Probably even more than from the approved ones!
Just as we learn more from our mistakes then from our successes.
But to get back to the question: what is that 85% doing wrong?
Many of us will probably think: ‘That’s obvious, Gerard!
The idea, or the plan, simply isn’t good!’
However, this is something that I have started to think differently about, certainly in the past five years.
Because how many of people don’t have at least one good idea – if not more?
If I were to ask my 85-year-old mother for an idea, she will be sure to have one.
Just like so many others. But that will not make her an Entrepreneur!
So, what does this approval, or rejection in another case, mean exactly?…
Asking a question is answering it – and that applies to this, too.
You simply can’t convince me that there weren’t more applications among those 245 loan applications, that were based on a plan or idea that wasn’t any good.
A rejected loan application doesn’t mean a thing if it doesn’t contain the actual (and honest) reason for the rejection.
If you have a truly marvellous idea but are not the Entrepreneur who should be taking charge of this project, the rejection will not be justified.
An honest assessor – at least one who has the courage to say the following – should say:
‘Gerard, your idea or plan is good, but we simply can’t imagine you handling it for the following reasons.’
Nobody has ever said this to me straight in the face, while it might have been a good idea at the time!
I am not a manager, so an Entrepreneur (or wannabe Entrepreneur) with an idea whose success depends on management qualities will fall short in nine out of ten cases.
Does this mean that the idea or plan isn’t any good?…
Absolutely not! It may just be that the right people aren’t around to get it off the ground or roll it out.
Unfortunately, many Entrepreneurs do not find out that they are not made of manager material until many years down the line.
Only a few individuals are successful in this respect – either that or they are actually managers calling themselves Entrepreneurs!
How about your application, or was it rejected?…
Of course, it is always disappointing to hear that an ‘investor’ may be enthusiastic about your plan or idea, but not about you! However, this person is usually working with other people’s money, and he or she is expected to achieve good financial results with it.
As an Entrepreneur, when you are going in search of money furnished by third parties you simply have to learn how to deal with rejection like an adult!
Of course, you can choose to continue with small-scale operations.
You are an Entrepreneur, after all, and free to do as you please.
However, if your plan or idea deserves better than that, it is essential that you inquire into the reason why your loan application was rejected!
Was it the plan itself, its scalability, or you?
And if it was you, what can you do about that?
The answer is obvious: to come back the next day with a team that will guarantee success!
You will always need to have a team to back you, because investors generally prefer to work with the right team rather than putting their money on a one-man show.
And be that man or woman who is capable of rising above a personal assessment!
Perhaps your power lies in your ability to come up with solutions!
When we think of Steve Jobs, don’t we all think about the designer of the iPhone? (Sorry, Samsung fans.)
Few of you will mention his management qualities, or even know whether or not he had these.
Because throwing a computer at somebody because they are not doing their job well has little to do with managing.
The solution is just around the corner!…
This autumn, we will be offering the following workshop: ‘How do I compile a successful financing plan?’.
This workshop is not intended only to help you formulate your plan or idea as clearly as possible, but it is also designed to assess all those other ‘soft’ issues and to make adjustments where necessary.
Of course, financial substantiation is also a part of this.
Before I am reprimanded by one of my colleagues (controllers)!
If you are interested in attending this workshop, stay informed, subscribe to the newsletter and take advantage of our ‘early bird’ special offer.
Among those 245 loan applications, of which 38 were approved, there were more that would have deserved funding.
And if you are unable to bear this financially, let me give you the following to think about;
An idea that is realised by 40% is better than an idea of which 100% never leaves your hard disk!
Entrepreneurial greetings,
Gerard Hofmeijer
