Questions owners actually ask
Why was my business funding application declined?
Most declines come down to six things, and four of them are fixable within 30 to 90 days. Here is how to find out which one it was.
A decline is rarely about one number. It is almost always one of a short list of problems, and most funders will tell you which if you ask directly. Here they are, roughly in order of how often they come up.
The six common reasons
- Negative days or NSFs. Repeated overdrafts in the recent statements. Fixable: often 30 to 60 days of clean banking.
- Existing positions. Already paying one or more funders. Fixable: pay down, consolidate, or wait.
- Deposits too low or too erratic. Below a funder's minimum, or swinging wildly month to month. Fixable: consolidate revenue into one account, build a track record.
- Time in business. Under the funder's threshold. Fixable only by time, though some funders have lower thresholds than others.
- Industry. Some funders will not fund certain sectors at all, regardless of how good the file is. Not fixable with that funder; another may have no such restriction.
- Credit events. Recent bankruptcy, open judgments or tax liens. Depends entirely on the event and how old it is.
What to do next
- Ask for the specific reason. Not "we could not approve you" but which of the above it was. You cannot fix an unnamed problem.
- Do not immediately apply somewhere else. A cluster of applications after a decline makes the next file worse. See what applying actually does to your credit.
- Fix the thing, then reapply. Thirty clean days can genuinely change an outcome, and it is the single highest-return thing an owner can do here.
- Consider a different product. Declined for working capital with slow-paying commercial customers? Invoice factoring is underwritten on your customers instead of you. Buying equipment? Equipment financing is secured against the equipment.
The honest part
Sometimes the answer is that the business cannot service the payment right now, and a funder declining you is doing you a favour. More debt does not fix a revenue problem. If the shortfall is structural rather than timing, funding postpones the problem and makes it larger.
Questions owners ask
Can I reapply after being declined?
Yes. Fix the specific reason first. Reapplying unchanged within days usually produces the same answer and adds an inquiry.
Does a decline show on my credit report?
The inquiry can appear if there was a hard pull. The decline itself is not recorded as such.
Will a different lender say yes?
Possibly, if the reason was industry or a minimum you narrowly missed. If it was negative days or stacking, expect the same answer anywhere.
Related
- Will applying hurt my credit?
- What is a factor rate?
- What lenders see in your bank statements
- Funding with an existing MCA
- How much can I borrow?
- How fast can I get funded?
- What documents do I need?
- What credit score do I need?
- Can they take my house?
- What is a UCC filing?
- Can I pay off an MCA early?
- What if I miss a payment?
- Under a year in business?
- What is a holdback rate?
- Tax lien or judgment?
- Is my industry restricted?
- What does a broker charge?
- Why 3 different offers?
- Do I need collateral?
- Will they call my customers?
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General information, not financial or legal advice. Terms vary by lender and business.