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How to apply for a business loan
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How to prepare your application to get a business loan

Getting access to sufficient funds at the right time can mean survival for some businesses, and growth and development for others. Whatever your needs, a business loan is one of the most fundamental tools you can use to ensure the future of your business. 

Getting a business loan approved can be a challenge. To give your business loan application the greatest chance of success, it is vital to understand some of the common reasons why a loan may not be approved.

Here are 5 common reasons a business loan may be denied, according to US-based small business loan specialists QuickBridge (2020):

  • Poor credit history
    Lack of a credit score, missed repayments, outstanding arrears or judgements on your credit report can all impact your current loan application.
  • Record of bankruptcy or sequestration
    If you have recently declared bankruptcy or are under sequestration, you may not be able to borrow more funds until your current debts are settled and you are officially rehabilitated.
  • Inconsistent cash flow
    When lenders evaluate a business’s ability to make loan repayments, they want to be sure that the business can make a payment every month. Although it may not be possible for every business to demonstrate consistent, regular income every month, doing so does improve the chances of a loan being approved.
  • Lack of track record
    Without a historical record of a business’s performance, it may be difficult for lenders to assess risk and calculate their ability to repay a loan.
  • Industry-specific challenges
    Certain industries come with certain challenges, and these can cause businesses in these industries to be perceived as high-risk by lenders. Seasonal businesses, non-renewable energy and hospitality industries are some examples of industries that may be considered high-risk by lenders, although this can change depending on market conditions.

With this in mind, it’s essential to be well-prepared before beginning your loan application. Having the right documents available and being able to provide lenders with the view of your business they need will make the application process more efficient and give you a greater chance of having your loan approved.

Here’s what you need to prepare to give your business loan application the best chance of success:


A 6-month overview of your business bank accounts

Providing at least 6 months’ worth of bank statements allows a business to demonstrate its track record and cash flows, helping lenders to quickly and accurately assess their ability to make payments.

Supporting documents including company financials, budgets, forecasts and business plans

Ensure your company documents are up to date before beginning your loan application as these may be requested by the bank during the application process. Documents such as sales projections and marketing plans can be persuasive in cases where a business does not have a consistent cash flow or is considered to be operating in an industry considered high-risk.

A credit report with no arrears or judgments

Your business should review its credit reports annually and ensure that the latest report can be supplied during the loan application process. A credit report is key to demonstrating the financial health of a business, from showing a track record of payments to indicating the health of cash flows and whether the business has any recent bankruptcy claims on its record.


Next steps

Use our business loan checklist to make sure you’ve got everything you need. When you’re ready, visit our website to apply for a business loan online or get more business news and insights to help grow your business with BizConnect.


QuickBridge. 2020. Top 5 Reasons Why Small Business Loans Get Denied. [Online]
Available: (Accessed 21 June 2021).

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