How to get working capital if your bank says “no”




How to get working capital if your bank says “no”

posted by: Jason Hulott

There is an old joke to the effect that the only thing that’s worse than applying for a conventional bank loan, is subsequently being turned down!

However, if such a refusal is starving you of working capital, it’s likely to be far from a laughing matter.

If you find yourself in a similar position, you may find some of the following useful.

Identify the reason

The bank may or may not provide the reason for them declining to progress your loan application further. Legally, however, they must tell you which commercial credit scoring system they used, so you can review your file information yourself and see if there anything that suggests why you have been refused.

If your commercial credit score doesn’t shed any light on the subject, then sometimes you may need to do a little reading between the lines or “digging” in order to get to the core of the matter. There are many potential reasons, just a summary of which might include:

  • you are asking for a sum that the bank believes cannot be sustained, in borrowing and repayment terms, by your company;
  • an examination of your company’s accounts or possibly your own personal credit standing has raised doubts in their mind as to the risks associated with lending to you;
  • you have applied for the wrong type of product;
  • the information you have supplied in support of your application is simply insufficient or is missing certain key components;
  • the bank has perceived the reason for your loan to be “negative” as opposed to “positive”. Negative reasons usually relate to non-specific funding requests designed to try and keep a fundamentally failing company in immediate-term operation. Positive reasons usually are those connected to business growth or short-term cash flow management problem resolution etc.

Whatever the reason might be, if you wish to consider further applications to other banks you may have to resolve it quickly – assuming that is possible of course.

Next steps

Although it is difficult to generalise, some banks may not welcome a revised funding application. Others may do so providing they believe the issue that caused them to say “no” initially was minor and has been resolved.

You could, of course, simply approach another conventional bank. There are variations between the lending policies of banks and what one finds to be unacceptable might be less of an issue with another.

Be clear though that every time you make a formal loan application and it is refused, those facts may be recorded on your corporate or personal financial history records. The more loan refusals you have on your files, the more difficult it might be to find business loans in future.

It therefore may be advantageous to consider other sources of lending, including those available through Cubefunder.

Why we and the bank might differ

It’s important to be clear that we cannot unconditionally guarantee in advance to find you funding.

Your proposition will need to be solid and of high quality, including in terms of perceptions of your ability to afford the repayments.

Even so, some lenders could be more risk-inclined than might be the case with some typical high street banks. There are many reasons why that is the case and they go back a decade or so into history.

It therefore may be worthwhile discussing your requirements with us to allow us to consider whether the more flexible lenders in the marketplace might be more receptive to your requirements than the conventional bank you have tried and failed with.

Note that our initial credit checks are of a type we call a “soft footprint” only. Even if we are subsequently unable to find funding in your particular case, our first researches will not have affected your credit history records.


If you find yourself in the frustrating position of having been turned down for a bank loan, why not contact us at your earliest convenience?

We may be able to provide a rapid resolution to your problem.