What are your options after a bank loan rejection?
If your bank has rejected your business loan application, you can still access funding through alternative lenders, many of whom specialise in businesses that high street banks decline. Apply through a multi-lender commercial finance broker like Fundably to compare offers from 50+ alternative lenders with a single soft-search application.
High street banks (Barclays, NatWest, HSBC, Lloyds) reject a significant proportion of SME loan applications. Their underwriting models are conservative, their risk appetites are narrow and their processes are slow. Being rejected by your bank is not a verdict on your business.
Why banks reject SME loan applications
Common reasons include:
Insufficient trading history: most banks want 2+ years of audited accounts. Businesses under 2 years old struggle with high street bank lending.
Impaired credit history: a CCJ on the business or director, missed payments or prior defaults automatically trigger rejection at most high street banks.
Insufficient security: banks often require property as collateral for larger unsecured loans. Businesses without property assets are more likely to be declined.
Sector risk: banks apply sector-specific lending policies. Hospitality, retail and property development businesses often face tighter criteria.
Revenue volatility: seasonal businesses, project-based businesses or those with inconsistent monthly revenue can trigger automated rejection.
Incomplete or delayed financials: many bank processes require full accounts to be filed. Delays in filing accounts can block applications.
What to do immediately after a rejection
Do not apply to multiple banks in quick succession. Each bank application typically triggers a hard credit search. Multiple hard searches in a short period damage your credit score and reduce your chances of approval elsewhere.
Instead: apply once through a multi-lender commercial finance broker. A broker with a 50+ lender panel uses a soft credit check at the matching stage, matches you to lenders with appropriate risk appetites and returns multiple offers without multiple credit impacts.
Alternative funding options for UK businesses
Alternative term lenders
Lenders like iwoca, Funding Circle, Nucleus Commercial Finance and OakNorth specifically target businesses that don’t fit high street bank criteria. They typically:
- Lend to businesses from three months trading
- Have more flexible credit policies
- Fund within 24–72 hours
- Charge higher interest rates than banks (reflecting higher risk acceptance)
Merchant cash advances (MCAs)
If your business processes card payments, a merchant cash advance (provided through YouLend, the only MCA on Fundably’s panel) advances cash against future card receipts. Repayment is automated as a daily percentage of takings, with no fixed monthly repayment. Credit history is less important than trading revenue.
Invoice finance
If your business raises invoices to customers with 30 to 90 day payment terms, invoice finance or factoring lets you access 80 to 95% of invoice value immediately. The outstanding debtor book is the security, so property and personal guarantees are often not required. Triver is the flagship same-day single-invoice option on Fundably’s panel.
Asset finance
Purchasing equipment, vehicles or machinery? Asset finance lets you spread the cost while the asset itself acts as security. Banks that won’t lend unsecured will often fund asset purchases at competitive rates.
Revenue-based finance
For businesses with recurring or predictable monthly revenue, RBF provides upfront capital repaid as a variable percentage of monthly income. More flexible than fixed monthly repayments; suitable for businesses with seasonal revenue. Specialists on Fundably’s panel include Outfund and Uncapped.
Improving your chances of being funded
Even with alternative lenders, some factors help:
- Bank statements: 3–6 months of clean, consistent bank statements significantly improve approval odds
- Reduce existing debt: outstanding personal or business debt affects affordability assessments
- Address any CCJs: satisfied CCJs (paid in full) are viewed more favourably; disputed CCJs should be addressed before applying
- Prepare a clear funding purpose: lenders respond well to specific, credible purposes (“purchase of CNC machine to fulfil a confirmed order”)
Frequently asked questions
How long does it take to get funded after a bank rejection?
Alternative lenders like iwoca and Funding Circle typically make decisions within 24–48 hours and can fund within 1–5 business days. This compares to 4–12 weeks for a typical high street bank business loan application.Will applying again damage my credit score?
Each individual bank application typically triggers a hard credit search. To avoid multiple hard searches, apply through a multi-lender broker. Fundably uses a soft credit check at the matching stage, allowing you to see multiple offers without affecting your credit score.Can businesses with CCJs get funded?
Yes, though options are more limited. Some alternative lenders on Fundably's panel, including certain invoice finance and asset finance providers, will consider businesses with satisfied CCJs. Providing strong bank statements and a clear funding purpose significantly improves your chances.What is the minimum trading history required by alternative lenders?
Most alternative lenders on Fundably's panel require three months of trading history. YouLend (which looks at card payment volume) accepts businesses from three to four months trading. Lenders like Triver fund single-invoice finance from very early trading where there is a creditworthy debtor. The Government's Start Up Loan scheme covers pre-revenue and early-stage businesses.Apply through Fundably’s 50+ lender panel for a soft search with answers within hours.