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Where To Get Big Business Loans If Banks Decline You

Posted On: November 1, 2017 author Paul Kendall

Did a bank just decline your application for big business loans?

Business owners use loans to keep their business running. Getting a loan could even be the last resort to salvage a business from bankruptcy.

However, banks are strict regarding their policies and requirements in giving out loans. Many applications are denied every day because they think that the borrower is not worthy enough for the loan.

It’s therefore important to understand the different requirements businesses must meet in order to get loans approved to increase your chances. But even this cannot guarantee an approval.

Fortunately, there are alternative options that can be considered when your big business loan application has been denied.

Alternative Options If Banks Decline Your Big Business Loans

Banks are usually strict regarding the required qualifications when giving big business loans.

But don’t let this falter you.

If banks deny your loan application, there are still other ways of to obtain a loan. Before we discuss the solutions to consider when your application is denied, let us first talk about the reasons why big business loans are accepted.

Reasons Why Big Business Loans Are Accepted

All businesses will encounter hardships that are more often than not caused by insufficient cash flow or revenue.

To keep your business running, getting a loan should be your first option.

Regardless of the type of business, companies undergo the same process when applying. Big businesses, however, will find themselves at an advantage in this situation, particularly if they’re applying for a big business loan.


Big Businesses Mean More Assets

With big businesses, financiers usually still feel at ease even if the business is unable to pay for the loan. The reason for this is huge amount of assets big business have at their disposal that can either be used as collateral or sold off to get the money required.

Not having a large business with only a few assets declared could be one of the reasons why your business loan application may be declined.


Larger Companies Have A Longer Business History

A company’s history serves as a basis for assumptions, and performance of what the company will be in the future. The likelihood of those assumptions being correct (or not) is referred to as risk.

If the risk is lower, the company can have better terms.

When it comes to big businesses that almost always have a larger and longer history, financiers know that assumptions for a big business’ performance are likely to have lower risks involved.


Big Businesses Have Established Reputations

Big businesses come with a solid and established reputation, and having such a reputation can already serve as a sort of guarantee. It would be difficult to even imagine that a big business with a strong established reputation would not perform well.

Knowing that a business has an established reputation will make it easier for banks to trust that business.



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Banks As the Main Source For Big Business Loans

Banks are the main source to apply for, and be offered, big business loans.

But acquiring a large business loan from a bank is not easy. In fact, banks have been shown to have a low approval rate - 20% to 40% - when it comes to business loans.

Here are three simple things to think about before you apply for a big business loan. Make sure that:

  1. Your paperwork is in order. Send in everything in with a write up, organized, labeled and all at once.
  2. Your business credit history is good and give written explanations about any hicups. 
  3. You have substantial collateral or are financing good collateral for big equipment financing.


However, fulfilling these three points above doesn’t guarantee a loan approval. It only ensures that your chances of receiving a large business loan from a bank will be fairly good.

It’s also important to note that banks require long processing time for these kind of business loans. Applications could take weeks, or even months with your local bank. Sometimes it feels like you're dealing with the DMV at your bank. Private equipment financing companies that offer big equipment loans are much quicker if you're looking for a big equipment loan.

Four Reasons Why Banks Reject Your Big Business Loans

We have already tackled the reasons why banks accept big business loan applications in the earlier section.

The reason you are probably reading this article is because you have discovered a completely different response from the bank - rejection.

If you are still pondering on your application, this will serve as a guide before submitting.

So why do banks reject business loans?


Business Has Poor Credit History

The first thing lenders look for in a business loan application is the business’ credit.

Having a good business credit score means that the owner of the business has a solid handle when it comes to personal and business credit. It also means that the business has a good reputation in handling their debts.

But if a poor credit shows up in the application’s credit history, it’s highly likely that banks would lose all confidence.

A poor credit is simply a sign that the borrower or the business does not prioritize the repayment of their debts.

Loan agreements come with financial obligations. Having a sub par credit rating has the implication that the borrower or the business will not be able to meet these obligations.

If you have a poor credit history it doesn't mean you won't get an approval. More collateral to pledge, contracts with customers, equity in the company could help get you to a big business loan approval. 


Business Has Issues With Its Cash Flow

Businesses have one thing in common: to make money.

Having money moving in and out of a business over a specific period of time is what we call a cash flow. It represents the “health” of the business and the possibility of its future growth.

If a company is not earning any money, then it will result in serious cash flow problems. This is one of the common reasons why banks are denying a business loan application.

A business that has a serious cash flow problem is a huge risk to lender, who would automatically assume that the borrower is not capable of repaying the loan.

When applying for a big business loan. Banks like to see an average balance of a Low 6 figure balance. 


Business Has Limited Collateral To Offer

Collateral is commonly required for any business loan. The collateral sometimes is just simply money down so you have skin in the game. The collateral supports the size of the business loan a company wishes to borrow.

If the business loan is too large banks may still end up rejecting a business loan application if a business doesn’t have enough collateral, despite having a fair cash flow and profit.

Some collateral is required especially for companies that have defaulted on their previous loans. So if that company has a limited amount of collateral, it’s highly likely that the company will face certain challenges securing bank loans.

There are some instances where businesses don’t have enough knowledge about the kind of assets they can use to serve as collateral for the business loan. Here are some kinds of collateral that big businesses can offer for the business loan.

The best thing you can offer would be a cross corporate guaranty from another business that's over three years in business and is profitable. Other forms of business collateral to offer to get a big business loan could be a lien on the businesses accounts receivable, a blanket lien on the business, heavy equipment for a sale and leaseback, titled vehicles, and real estate.


Difficult Conditions

Although a business is running well with minimal debts and good cash flow, there’s still the possibility that it will face industry-specific difficulties. The local, state, and federal ordinances where the business stands are among these difficulties. Especially for businesses buying marijuana equipment.  

In addition, there are also seemingly unrelated factors like the local climate conditions, which may also influence the approval or denial of the business loan application.

But regardless of these difficulties, some banks just outright refuse to lend to businesses that are under certain industries. Such as businesses buying gambling equipment, ATM's, and Aesthetic equipment. 



Alternative Options When Banks Reject Your Big Business Loans

Now, if banks reject your big business loans, don’t stop searching. There are alternative options where your loan application would be accepted.

There are still other financial institutions that you can turn to if you really need to be approved for big business loans.


Private Equipment Lenders

Private equipment financing companies are one source for big business loans. They include a variety of potential partners. These partners may include high net worth individuals, boutique equipment financing companies, small family offices, and even private investment groups.

Some sort of business’ equipment collateral or the equipment you're purchasing is what they exclusively look for, rather than just the business’ credit. Heavy equipment that holds it value over the years is easier to qualify for. Their role is to buy the equipment for you as a third party and then you can lease it from them.

Privately held equipment financing companies can provide short and long term payment plans and even provide equipment financing for a business with bad credit. Although they could cost more than your local bank, they excel in speed and creative structures for big business loans. Such as no payments for the first 90 days or seasonal payment plans. They can also fund a big business loan in a matter of days. 

Convenience, flexibility, customer service and speed is what you should expect from equipment financing companies. Privately held equipment leasing companies may have lower rates than your local bank especially for information technology equipment, heavy industrial equipment and construction equipment.

Some equipment financing companies specialize in refurbishing and reselling IT equipment. Since they're able to make a high return on reselling the equipment when your equipment lease is done. They're able to offer you a low equipment leasing stream rate that can beat your local banks rate. 

Privately Owned Working Capital Lenders

A privately held working capital lender may have working capital rates as high as 120% (, which often depends on the company’s credit situation, time in business and financial health.

Apart from accessing the needed capital, there is the ease of obtaining the funds because of their fast funding process. Big businesses can have more flexibility when it comes to the use of funds and reduced documentation requirements.

There is also little to no covenants and an all-around creativity of private lenders that think ‘outside-the-bank’.

There are privately owned working capital lenders with competitive rates such as Bankers Healthcare Group, Fundation and Funding Circle.

These types of big business loans can be risky for working capital lenders. One privately held working capital company called Dealstruck existed for a few years but went out of business because of poor investments with no collateral. The reason some of these business loan companies have such high rates is to recover from the working capital loans with bad credit that defaulted. So in turn someone who deserves a lower rate doesn't get one because of all the other transactions that have defaulted in their industry. 

Financial institutions are alternative lenders that are also commonly referred to as FinTech or peer to peer lenders. Most have a maximum business loan funding amount of $500,000 - $1,000,000.00. They offer affordable and fixed monthly payments for big business loans. Sometimes you have to take a business loan from multiple lenders to get the full funding amount you're looking for. 

There aren't that many privately held businesss loan lenders that don’t require more than two years time in business yet they still provide competitive rates for big business loans. 

There are some privately held working capital lenders that will provide a company with a big business loan in the form of a sale and leaseback. This is where companies sell heavy equipment they already own to an equipment leasing company in return for cash back for their business. 

Final Thoughts About Big Business Loans

Loans are a common concern when it comes to businesses, big or small. In this article, we discussed the different reasons banks accept some loans and deny others.

When it comes to big business loans, we have realized that larger companies tend to get accepted because:

  1. They have more assets at their disposal, which can be used as collateral or sold off.
  2. They have longer and larger history.
  3. They have established reputations that are assumed to be a guarantee to banks that they will be able to pay.


We also addressed why banks reject big business loan applications.

When bank loans are denied, it’s not the end of the world. There are still alternative options for you: private equipment lenders, private working capital lenders, investors and financial institutions. These options ensure that your application has a higher chance of approval.

If you have other concerns regarding your big business loan you can call Trust Capital USA at (866) 458-4777.

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