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3 Reasons Your Business Loan Was Denied By Your Bank

“I have no idea why I was even turned down!” This is quite a popular statement among many clients of Synergy Merchants. We often hear about the horror stories experienced by Canadian small business owners that entail their attempts to secure business loans from banks. In many of these instances, these entrepreneurs felt greatly let down by the financial institutions they had been doing business with for years.

With such long-standing business relationships, why were so many of them unsuccessful in securing the financial support they needed to grow their businesses? Unfortunately, the reasons are many. As we’ve blogged about in the past, bank loans are increasingly hard to come by for small business owners in this country. And although many loan officers won’t reveal the reasons for the business loan declines, we will.

Here are three reasons your business loan was denied by your bank:

1. You have either bad credit or not at all. Banks insist upon doing credit checks. There’s no way around it. In many cases, this is bad news for owners of upstart companies because they haven’t been given enough time to establish worthwhile credit histories. Without a credit score, a loan is practically impossible. Furthermore, if you have a history of making late payments or being in debt, you’re not likely to be able to borrow any more money from the bank.

“A credit score is a measure of a person’s or business’s creditworthiness,” explains Teddy Nykiel on, “Banks generally look at both personal and business credit scores to make lending decisions and set interest rates…Generally, a credit score can be low for several reasons, including bankruptcy, and late or missed payments to lenders, credit card issuers and vendors. Some businesses are simply too new to have established any credit history.”

2. You don’t have enough collateral. All banks require collateral as well. This is simply another way of a bank asking “what do you own that you’re willing to risk in the event that you can’t pay us back?” In most cases, collateral can come in the form of physical property, such as your home. “All business loans require collateral,” explains Isaac Juarez on, “Unfortunately not all businesses, cash flow and profits aside, have sufficient collateral to support the size of the business loan they wish to borrow.”

3. Your cash flow is weak. We know. The reason you’re attempting to secure additional financing is because you don’t have enough money, as it is, to fund your latest business-growing venture. Nevertheless, banks need to assure themselves that you’re making enough money to make the monthly minimum payments that are due to pay back the money you’re borrowing. It’s kind of a “catch 22” isn’t it?

“Banks want to see that businesses have enough money to make monthly loan payments in addition to covering rent, payroll, inventory and other costs,” explains Nykiel, “However, many small businesses struggle to keep enough cash in the bank even if they’re profitable, often because they have to pay third-party suppliers upfront before they get paid for their product or service.”

At Synergy Merchants, we don’t do credit checks and we don’t require collateral. We’re also not worried about your cash flow because the way in which our merchant cash advances are paid back is through a small percentage of the future sales you will be making via credit card and debit card transactions. Getting approved for a merchant cash advance has been proven to be a whole lot easier than getting approved for a business loan by a bank!

For more information on our merchant cash advance program or to speak with one of our licensed funding specialists to get a free, no obligation quote, simply call Synergy Merchants at 1-877-718-2026 or email us at

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