The bank said no to your business loan. What now?

Ask the bank for the reason

Under federal law, a lender that turns down your business loan application has to give you the specific reasons, or tell you how to ask for them. Ask in writing, within 60 days of the decline. Answers on the phone tend to be vague. Answers on paper tend to be specific.

The reason is worth more than the decline. Too little time in business and too little cash flow to cover the payment lead to completely different next steps.

Match the reason to the fix

Each common reason has its own route forward.

• Time in business. Banks often want two years of history or more. Deposit-based funding starts at six months, so this is the easiest decline to route around.
• Credit. If the score was the problem and your deposits are steady, an advance or equipment financing can still work. Fix any errors on the report now, before the next bank application.
• Collateral. Some options do not need real estate or equipment behind them: advances, some lines of credit, and invoice factoring. They cost more than a secured bank loan, and most still file a lien on your receivables or business assets and ask for a personal guarantee.
• Cash flow. If the bank ran your numbers and the business cannot cover the payment, believe it. A faster, more expensive product makes that problem worse. More money will not fix a margin problem.

Your options, cheapest first

If you have time, try the cheaper doors before the fast ones.

• A different bank or a credit union. Credit boxes vary from lender to lender, especially at smaller local lenders.
• An SBA loan through a lender that does a lot of them. Slower, more paperwork, and usually the lowest cost you will find.
• A microloan through an SBA intermediary or a community development lender, for smaller amounts.
• A business term loan, $25K-$2M on terms up to 10 years, or a revenue-based line of credit, if your file is solid but the bank wanted more history.
• A merchant cash advance, $10K-$2M, when speed matters more than cost and the use pays back fast.

When an advance is the right call after a bank decline

An advance fits when you need the money in days, the use earns more than the money costs, and your deposits can carry a daily payment. A restaurant replacing a failed walk-in cooler before the weekend is a good fit. A renovation that pays off over five years is not.

First offers typically land within one business day. Funding comes after you sign. The cost is fixed on day one, and factor rates typically run 1.22 to 1.45, so price the offer before you sign it.

What to bring when you call us

Have these ready when you call: the bank's reason for the decline, your last four months of business bank statements, and a clear answer to what the money is for. With those three things we can usually tell you on the first call whether an advance, a line, a term loan, or a second bank is your best move.

Common questions