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Next Steps After A Business Loan Rejection


Ryan Kelly- Co-Founder/Partner at Lendzi

In a perfect world, you could start a business with a great idea, immediately get funding and be on your way to living your dream. Unfortunately, that path to business financing can often be rocky. In my line of work, I have seen many businesses, particularly startups, denied when they initially apply for a traditional bank loan. But you can’t give up at the first sign of trouble with something as important as your business. Here are some of the steps you should take if your initial application for a business loan is met with a denial. 

1. Review the reasons for the rejection.

Banks and other financing institutions approve or deny loans according to strict internal policies. Applications aren’t simply dismissed out of hand based on the whim of a lending officer. Rather, there are specific criteria that determine whether or not a loan application passes muster. If you’re rejected for a business loan, find out the specific reasons why your application came up short. This is critical information because you can use it to shore up your business metrics for your next application. But don’t despair if your company seems to be far from meeting the standards required to get approved for a business loan, as there are also other options you can consider.

2. Consider alternative forms of funding.

Traditional bank loans may have been the only way to get business financing a few decades ago, but these days, lending is a highly competitive field. As a business owner, this is a huge benefit to you. When lenders compete, not only are a greater number of funding options available to you, but this competition helps keep interest rates down as well. 

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Here are just a few of the nonbank and alternative forms of funding that you can explore if your business is turned down for a traditional loan: merchant cash advance, SBA loans, equipment financing, debt consolidation, home equity line of credit, personal loan, business line of credit, business term loan, commercial mortgage.

Not all of these types of loans may be a solution for your business after a traditional bank rejection, but some may very well be. In addition to these options, there may be additional ways to creatively get financing for your business, particularly when working with a specialty lender. That’s why the next step of the process is so important.

3. Work with a business loan specialist.

Most business owners, especially new ones, aren’t all that familiar with the business loan process and all of its options. Some might view the rejection of a traditional business loan to be the end of the process. It might be beneficial for you to talk with a business loan specialist if you find yourself in this situation. They can help you compare the features, benefits and costs of numerous traditional and alternative loan providers. There are also online companies that can devise options for you after you fill out an online application and provide essential information about your business, including your funding needs. (Full disclosure, my company offers this service, as do others.) From there, you can pick up a phone and talk to a specialist directly to see which options might best suit your particular business.

4. Don’t give up.

Starting a business from scratch requires a vision, sacrifice and dedication. A rejection of a traditional banking loan is just one of many obstacles your company is likely to face over the years. But it’s times like these when you can learn to persevere. Research other options if a traditional banking loan isn’t working out, and be willing to ask for help if needed. There’s an entire industry of financing options available to those willing to explore them. If you want your business to survive, and ultimately thrive, never give up if you’re facing obstacles to financing.


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