Managing your business / Resources

Business Loan Rejection Isn’t Personal — Get Your Ducks in a Row

By: Kate Samano February 16, 2022

If you’re just starting a new business, you’re no doubt enthusiastic about its prospects. Many starry-eyed entrepreneurs feel that their business idea will change the world, and that everyone who hears about it will want a piece of it. But as exciting as your business idea may be, unless it makes prudent financial sense, you won’t see a dime of financial support. Unless you have everything that will qualify you for financing in order, you’re likely to face business loan rejection, no matter how brilliant your business idea may be. So rather than taking your business loan rejection personally, follow these steps to help ensure that you can marry your perfect business idea with the right financing option.

Don’t Apply for a Loan Until You’re Ready

If you’re looking to avoid rejected loans, preparation goes a long way. If you don’t have your ducks in a row when looking to raise money, at the very least, the process will be much more time-consuming, and it can often lead to a business loan rejection. Understand what you need as a business, and try to build a case that your company either has the resources – or will in the near future – to pay back your obligations. 

Remember, at the end of the day, lending is all about risk and reward. The better you can position your company as being a lesser risk, the more likely you can avoid rejected loans. Check your business and personal credit score, evaluate your cash flow or projected revenue, and put yourself in the shoes of the lender. Would you risk lending money to a company like yours? If the answer is no, head back to the drawing board and present a more convincing case as to why your business is a good credit risk.

Use a Business Loan Calculator

A business loan calculator is a tool that all companies need. The profitability of a business often comes down to very thin margins, so knowing the exact amount that you’ll be paying for your financing is absolutely critical. Whereas these types of figures used to be hard to come by, now it just takes a simple mouse click to find an appropriate business loan calculator online. Some calculators will provide you with an estimate as to how much you might be able to borrow, based on your revenue and credit score, for example, while others will calculate a monthly payment for your loan based on the amount, term and interest rate. Having these numbers in hand before you apply for a loan can also help you understand what might be a fair offer from a lender.

Requirements for a Startup Business Loan

Different lenders and financing options may have different requirements, but they all amount to proving to a lender that you’re an acceptable risk. This can be a challenge as a startup because you don’t have years of operating history to draw upon. However, startups can and do get financed. Here are some of the startup business loan documents you should prepare to show to lenders :

  • Identity and business verification
  • Tax returns, if available
  • Financial statements, such as cash flow statements, balance sheets and income statements
  • Business plan

As a startup, your financial records may be lacking compared with more established competitors. But this doesn’t mean you can’t get financing. In fact, there’s a thriving financing business for startup companies. You just have to be prepared to go a more non-traditional route.

Think Beyond Traditional Loans

Business owners who are new to the world of financing often think that a traditional bank loan with a large, well-known institution is the only way the companies can raise money. But thanks to innovations in financial technology and the growth of internet-based solutions, there’s a wide variety of ways that businesses, even startups, can raise funding. Here are just a few startup funding options:

  • Business lines of credit
  • Equipment financing
  • Merchant cash advance
  • Invoice financing
  • Personal loan
  • Home equity line of credit

Those last two startup funding options require you as a business owner to put up your own personal assets as collateral to help finance your business. While not ideal, it’s relatively common for businesses that can’t get financing any other way to rely on the personal credit of their owner. Of course, this doesn’t mean it’s the optimal way. If you’d like to explore that type of financing – or if the other ways of raising capital on this list are unfamiliar to you – then it’s essential that you speak with an expert to help find a financing match for your company.

Talk With a Loan Specialist

It’s not at all uncommon for an entrepreneur to have a world-class business idea but absolutely no idea about how to finance a company. That’s why it’s imperative for business owners, particularly of startups, to consult with seasoned professionals. 


Ideally, you’ll want to work with a specialist at a loan comparison site. Whereas a loan officer at a bank has an incentive to steer you towards the bank’s own products, an online comparison specialist is only interested in finding you the best match for your company’s needs. Plus, comparison sites can offer you various types of lending options that you may not even be familiar with in order to secure financing for your business. 


Since there’s no obligation involved, it only makes sense to at least visit a comparison site, get a wide range of financing quotes, and talk to a specialist who can help walk you through the process. Then, before you proceed with any applications, you can be sure that you’re ready to put your company’s best foot forward and have the greatest chance at securing the financing you need.

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