Why banks say no
Banks lend within tight policies that suit some businesses better than others. A decline usually says more about the bank’s criteria than about whether your business is worth lending to. Common reasons include:
- Trading history. Many banks want two or three years of filed accounts.
- Sector. Some industries, such as hospitality or construction, fall outside a bank’s appetite.
- Credit history. A missed payment or a past county court judgment can rule you out automatically.
- Security. Banks often prefer property or assets to secure larger loans.
- Affordability. Seasonal or uneven income can look risky on a bank’s standard model.
What to do before you apply again
- Ask the bank why. Banks taking part in the government’s Bank Referral Scheme may also offer to pass your details to finance platforms, if you agree.
- Check your credit files. Look at both your business and personal credit reports and correct any errors.
- Don’t apply everywhere at once. Several hard credit searches in a short time can make the next lender more cautious.
- Get your bank statements in order. Most specialist lenders decide largely on recent trading, so clear statements matter.
- Be clear on the purpose. A specific plan, with how it will be repaid, is easier for any lender to say yes to.
Where else to look
Specialist lenders work differently from banks. Many focus on how your business is trading now, decide more quickly and offer products banks don’t, such as merchant cash advances, revolving credit and invoice finance. Some consider businesses with adverse credit or a short trading history.
The trade-off is that specialist finance can cost more than a bank loan, so it’s important to understand the total cost and any personal guarantee before you commit. Our quote checker helps you compare offers fairly.
How BrightSky can help
An adviser will look at why you were declined and which lenders on our panel are likely to consider your business, then approach the right ones first, so you’re not collecting credit searches. If borrowing isn’t the right move yet, we’ll tell you what would strengthen your application.