Why business loan applications get declined?

Alright, let’s tackle the elephant in the room—why business loan applications sometimes get the dreaded decline.

Here are the main reasons your application might not make the cut:

1. Weak Financials: If your business financials don’t show that you can handle the loan repayments, lenders will likely pass on your application. They need to see a strong, steady income that can cover the loan.

   
   

2. Bad Credit History: If a business owner or director has a poor credit score or no active credit history, that’s a red flag for lenders. They see it as a higher risk of default.

   
   

3. Customer Concentration: If your business relies too heavily on a small number of customers for its revenue, lenders worry about your cash flow stability. They prefer a diversified customer base.

   
   

4. Industry Outlook: If the market sector or industry your business operates in has a poor outlook, lenders might be hesitant. They look for industries with growth potential and stability.

   
   

5. Limited Operating History: Newer businesses often struggle to get loans because lenders prefer to see a track record of success. If you haven’t been operating long enough, they might see you as too risky.

   
   

6. Inexperienced Brokers: If you go to a broker who has no idea what they're doing and doesn’t specialise in commercial finance, you’re asking for trouble. It’s like trusting a koala to navigate rush hour traffic—cute, but disastrous. You then increase your chance of being declined.

Got more questions or need help with your business loan application?

Contact Motive Finance today and let’s get you on the right track!