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Small Business Loan Application Rejected? You Still Have Options.


In a simple world, small business owners would be able to head into the local neighborhood bank whenever they needed money. They could spend a few minutes filling out a small business loan application, shake a banker’s hand, and walk out with a briefcase full of cash that they could then immediately invest in their business.

Unfortunately, it doesn’t work that way—even if it might have in the past.

Following the recent financial collapse, banks have been particularly hesitant to lend money to small businesses. According to recent figures reported by The Wall Street Journal, banks originated 58 percent of loans in 2009. By 2015, that number dropped to 43 percent. It turns out that banks have learned their lesson after they lost a lot of money as small businesses went under.

With banks approving fewer and fewer small business loans, you shouldn’t feel bad if your application was denied. A recent report reveals that banks only approved 23.1 percent of the loan applications that crossed their collective desks in July 2016. So if you are one of the unlucky ones, take comfort in the fact that many other small business owners find themselves in your shoes.

But all hope is not lost. Whereas banks have left small business owners in the cold, a number of alternative non-bank lenders have risen to the occasion to lend money to them. In fact, these alternative lenders have increased their share of small business loans from 10 percent to 26 percent over the last few years, according to The Wall Street Journal.

While non-bank lenders don’t approve every application that comes their way, they have substantially higher approval rates than traditional financial institutions. For example, a recent study shows that non-bank lenders approved 61.6 percent of small business loan applications in January 2015.

Apply for a small business loan today »

Quite simply, if you’re a small business owner who needs money to grow your company, you’d be wise to apply for a loan from a non-bank lender today. In addition to having a significantly higher chance of being approved, you’ll also benefit from:

  • A streamlined application process. Banks typically require small business owners to submit a ton of business-specific paperwork and financial information during the loan application process. It can take quite a bit of time to track down all the documentation you need in order to apply. Non-bank lenders, on the other hand, have a much simpler approach. You should be able to fill out your entire application within 15 minutes.

  • Money in your bank—quickly. Even if you’re lucky enough to win approval from a traditional banking institution, it can still take weeks or even months before money is actually deposited into your business’s bank account. Non-bank lenders move much more quickly. Apply for a loan today and money can be in your account tomorrow.

  • Minimal requirements for approval. Banks are quite picky when it comes to choosing which small businesses to lend to. They generally prefer funding businesses that have perfect credit scores and long histories of success. This, of course, isn’t very helpful if yours is a new business. Non-bank lenders are much more open to funding new businesses. If your business has been open for at least one year and you’ve demonstrated the ability to consistently generate revenue, you should be good to go.

  • Flexibility with your money. When banks fund small businesses, the money is usually earmarked for a very specific purpose. So if you get a loan from a bank and say that you’re going to use it to buy new equipment, that’s what you have to do. Non-bank lenders offer much more flexibility with your loan. Use it to buy inventory, to hire new employees, or as a short-term bridge—whatever you need in order to grow.

If a big bank has just rejected your small business loan application, don’t be discouraged. Apply for a small business loan from a non-bank lender today! You’ll be able to reclaim control of your company’s cash situation and begin growing your business right away.

Download our free guide: The Ins and Outs of Qualifying for a Small Business  Loan »