Declined for a business loan?
Has your business been declined for a business loan? Where can you be approved? What can cause me to be declined?
What are the most common decline reasons? These questions and others
are asked by customers and lenders.
If you have been turned down for any decline reason, contact us. We specialize in difficult to approve businesses and business loans and have programs that can approve your business for any decline reason.
If your business has been turned down for a business loan, the first step is to call up the company that turned you down. Determine if you are speaking with someone that has the knowledge and experience to provide you with useful information about the decline. If you received a letter, call and confirm the decline reasons. In many cases, you may have been formally turned down for more than 1 reason, and as many as 4 decline reasons.
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Missed daily payments
You have an existing daily or weekly Merchant Cash Advance and you have missed payments on the advance. Missing daily payments is a major reason why a new loan request may be denied. Missed daily loan payments may can a renewal request to be denied.
Average Daily Balances too low
This decline reason means that your daily ending balances were too low over the month. Lenders have different balances that they want
and often will not tell you. Many lenders often want at least $1,000 Average Daily Balance.
Inconsistent Cash Flow
Business cash flow has fluctuated too much from month to month. In some months the cash flow meets the minimum required by the program and in other months it does not.
Declining Cash Flow
Total monthly deposits into the account have been declining from month to month. Even if the average still meets criteria, the lender may still feel this is a reason for the turndown.
Does not meet criteria
This is a general decline reason. If you are declined for a business loan for this reason, the lender does not want to tell you the decline reason.
Month to Date MTD
This a decline reason that often happens with Merchant Cash Advances. The Month to Date activity is requested for the current month. If the deposits are on track to be significantly lower in the current month, the approval be declined or the amount may be reduced.
Ask if significantly lowering the amount of the request, adding a strong co-signer, or adding more collateral would cause them to reconsider and possibly approve the application. For these questions, if possible, speak directly with the credit department that makes the credit decision.
If any of the reasons you are declined for a business loan involve credit, you will want to contact at least one of the credit reporting agencies to determine what is on your credit file. You may already know most of what is on your file, though you should get a copy of your file to confirm it. If there are any inaccuracies, you should dispute them with the bureau. This is easy to do and can improve your bureau without significant effort. If the bureaus cannot prove the information is accurate, you may have success in getting it removed.
Once you accept what is on your credit report, begin looking for other alternative loan options. First determine what are the strengths of your business and weaknesses of your business. When you contact companies, find out as much as you can about what their alternative loan options are based on. Instead of choosing the business loans you like best, organize the loan types in terms of what your business is most likely to qualify for. Of those loan options, then decide which ones you believe you should proceed on.
Other Loan Options
Discuss the loan options with the representative and speak with someone who is knowledgeable, rather than someone reading from a script. If they don’t give you logical answers to your thoughts or concerns, try to speak with someone else. Don’t feel that you must get all the funds you need through 1 type of loan, or all of it immediately at that time. There may be 2 loan types that you should proceed on.
If your business needs $100,000 in total, and you only qualify for $50,000, this may still work by getting the funding in segments over time. You can take the $50,000 you qualified for and also work on getting the rest of the funding required over the course of the next few weeks or months. Chances are you did not need the entire $100,000 immediately. Most businesses that receive $100,000 do not spend it all within the first 30 days. If your business has been declined for a business loan, many of these steps will be important to getting approved.
For additional resources to help you prepare for future business loan requests, you can
also visit the SBA. The SBA government site has numerous resources which can assist your business.
Thank you for visiting our resource page on what to do if you are declined for a business loan.