In our last blog, we talked about some of the most common reasons, why banks decline business loan applications.  Even for those who manage to get approved, they do not secure nearly enough funding to successfully run their operations, and as a result, these businesses start having cash flow challenges.

So, if your business loan application has been declined then you might not know where to turn or what to do next. Should you apply again and if so, then how long should you wait before applying.  Most importantly, what do I need to do first to increase my chances of approval? 

At BPF Solutions, we have been helping small to medium size businesses for the past 30 years by providing advisory and financing services.  Based on our experiences with clients, below are some basic actions you can take once you have been declined to increase your chances of success the next time.


1. Find out why you were declined

It is important to find out why your loan application was declined before you apply again. Lenders will generally be glad to give you an explanation, so you do not have to remain in the dark.  So, the more you can find out the better prepared you can be to overcome those issues in your next application.   


2. Address the issue first

Most often or not we see entrepreneurs go from one lender to another without addressing the issue that caused the loan application to get declined in the first place. This is a critical mistake, as going from one lender straight to another actually can hurt your credit.  Instead go to one lender at a time, taking the time in between to improve your application and plan with the feedback you receive.  You need to address the issues for which your loan was declined in the first place whether it is credit, not enough equity, low debt servicing etc.


3. How long I should wait before re-applying

There is no rule on wait time. You can re-apply to another lender immediately after being declined.  However, experts will not advise you to do that. You must take the time to do the analysis to determine what the issues are and define the steps you can take, to ensure you aren’t declined the next time.  Sometimes, your deal may require complete restructuring to make it fundable.  At this point, it’s a good idea to seek out the advice of an expert, who can guide you through the process to increase your chances of success. 


The Bottom Line

If your loan application is declined, do not give up. Take the above actions to address whatever the issues may have been that led to the decline before you apply again. Some may simply require more information, like including more financial data, but others may require time and patience like making improvements to your credit. But ultimately, these approaches will make you a better loan candidate the next time, which will increase the odds of getting approved in the future. 

At BPF Solutions we have 30 years of experience in Business Financing and Advisory that we can use to help you.  Our services include reviewing your rejected applications and working with you to address the weaknesses and then restructuring the deal to make it fundable. So contact us today!