Refused business funding? Here’s what you can do

Jun 01

When you start up a new business, it’s likely funding is necessary. Whether that involves stock, equipment, staff wages or even alleviating cash flow issues – you may need a loan. However, your application will depend on the ability to make repayments, as well as the lender’s confidence. It is, generally, less tasking to obtain business finance if you have information regarding previous revenue, with realistic sales forecasts. Startup business face more of a struggle and, Business Rescue Expert – leading insolvency practitioner firm in the UK – is sharing their tips for those who have been refused funding.

There are many reasons as to why your company may have been refused finance, but we have outlined the most common factors to take note.


You may present a risk to lenders through previous defaults. Therefore, they are more likely to refuse to fund. For instance, any CCJs or statutory demands will stand against you. Alternatively, not enough prior information on your bank loan application can also lead to lenders refusing to part with their money.

Lack of security

It’s common that a lender will look for security in the form of personal guarantees. Essentially, this means you – as a director or owner – will have responsibility for the debts. The ‘guarantors’, if you will, are held personally liable for the debt, along with any charges that may include interest or penalties. Unfortunately, small businesses and startup companies may find it difficult to obtain a secured business loan. However, that need not be the case all the time. There are various companies out there like L3 Funding, for instance, that tend to understand the challenges faced by small and medium-sized businesses and provide them with funding options such as unsecured business loans, lines of credit, and merchant cash advances. You can find online resources that outline the step-by-step application process for obtaining such financial aid and getting access to the capital you need without having to go through a lengthy and complex application process.

Previous trading history

A lack of trading history often hinders startup companies. A healthy track record of revenue, budget, and experience can substantially boost a lender’s confidence. Generally, lenders look for around one-year business before providing funding. However, if you need finance now, you may face several challenges – particularly in proving you can make regular repayments. But, a good credit score will encourage lenders to provide finance.

Bad credit score

While a good credit score can encourage lenders to offer you a business loan, a bad score has the opposite effect. Small business funding does require a good personal credit score, and there are many channels available to check.

Bad bank loan application

If you do not apply for a bank loan using the correct methods and providing all available information – you will, more than likely, be rejected. If you do not know how to complete the application – possibly losing out on crucial finance – you must seek advice from industry peers and the like. They can provide invaluable tips for doing so.

What are my options?

If you have been refused funding, you certainly shouldn’t lose hope as there are a number of options available to explore.

Equipment financers

Certain businesses may require financing to invest in assets such as machinery, equipment, and many others. Securing a business loan may be difficult due to the formalities involved–you would have to present your business plan and outline the ways you can repay the debt. Nevertheless, you may find private institutions, finances, and lenders that grant business and equipment loans at competitive rates without too much scrutiny on your credit score, business security, or trading history.


Kickstarter and Crowdfunding are responsible for making crowdfunding popular and may be a viable business option. Essentially, this process refers to small amounts of investments from a large number of investors. To prove successful, you will need a clear and unique pitch.

Peer-to-peer funding

Peer-to-peer funding is similar to the above, providing businesses with the chance to connect with individual and corporate investors. This is generally interest-based with better rates on return. Plus, you gain valuable knowledge and experience through industry leaders.

Development finance

It is a loan option available to businesses that need to develop existing or new projects. It can be used to finance a variety of projects such as property development, infrastructure, or equipment. The loan amount and terms of the loan vary depending on the specific project and the business’s specific needs. Those interested to obtain this type of finance can get in touch with the finance advisory firm Delphos as DFI’s and Delphos often go hand in hand.

Asset refinance

It is possible that you can free up cash when refinancing particular company assets. However, we suggest looking into this more carefully before doing so.

Invoice finance

If you have had a business loan rejected, then invoice finance may be an option. For instance, lending is organized against the amounts raised in a particular invoice. However, it is not suitable for all companies, and we suggest seeking advice before going down this route.

Ultimately, there is a range of finance options but you must consider all pros and cons before going ahead.