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REJECTED Top 10 Reasons For Business

Funding Rejections

4. Poor Financials & Cash Flow
Th Businesses with the identified cash flow will be
CA Manoj Sureka preferred by lenders.

5. Lack of Proper Records.
Lack of proper accounts and finance department
providing transparent records is the reason many
Running a business requires a lot of passion
and patience and only an entrepreneur’s mind can lenders decline funding.
understand it. One of the most important things to run 6. Limited Customers & Suppliers
a business is funding. It’s very difficult these days to Lenders often consider businesses with a high risk
grow a business with money drawn from your own that has a significant dealing with only a selected
pocket only. Whether it’s buying inventory, marketing, number of customers or vendors.
paying salary, or any type of expansion requires extra 7. Lack of historical performance
funding of capital. A business that does not get funding A business that has sustained for a certain amount of
put entire blame on lenders that they do not support. time and has reaped success and credibility in their
But at the same time Lenders (including Banks and performance is always more desirable for lenders.
Financials Institutions etc.) also have to safeguard their
shareholders and depositor’s money. There are a variety 8. High-Risk Industry
of reasons why lenders are declining funding requests. Lenders usually have their own list of negative sectors
The following is the list of the top reasons: where they avoid any further funding exposure.
1. Unclear Business Model 9. Insufficient management team
A lender always looks for a business with an efficient Lenders are reluctant to fund if business owners or
and effective business model with immense clarity their management team don’t have strong experience
of action and trade. and leadership skills since that can bring up concerns
about the long-term success of a business. The task
2. Poor Credit Rating to catalyse the right team for the business - is a
Maintaining a good credit score like AECB etc makes challenging one but is unavoidable.
your business more desirable among lenders and
investors. 10. Not Approaching a Right Lender
Approaching the right lender is the key to the
3. High Leverage doorway of funding, not all the lenders are funding
It’s crucial for a business to have the right structure all the business sector and product requirements.
of funding for optimum utilization to keep a balance Each lender has its own focus area.
between equity and debt.

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