Getting denied for business credit is frustrating, but knowing why you were turned down can help improve your chances next time. From your cash flow to your utilization ratio, this infographic breaks down the common reasons small businesses are turned down and explains steps to take before reapplying.
BUSINESS CREDIT:
IF YOU GET DECLINED
When a bank considers your application for business credit, they take a close look at your history with creditors and billers—as well as reviewing your company’s financials. These are some of the reasons applications are declined.
YOUR CREDIT
REASON FOR DECLINE 
Your payment history is unsatisfactory.
WHAT IT MEANS 
Your personal or business credit report shows a pattern of late or missed payments.
WHAT YOU CAN DO 
Always pay on time. It can take years for blemishes to fall off your report completely, but consistent, on-time payments will help.
REASON FOR DECLINE
You have a lack of established revolving credit.
WHAT IT MEANS
Your credit report doesn’t show a long history with credit cards or other creditors.
WHAT YOU CAN DO
Time is one of the most important factors in your credit history. The longer you can show a pattern of on-time payments, the better. Applying for a secured credit card is one way to build your history.
REASON FOR DECLINE
You’re using too much of your credit.
WHAT IT MEANS
Lenders dislike when you’re using all—or even most—of the credit that’s available to you.
WHAT YOU CAN DO
If you can, keep your utilization ratio—the percentage of credit you’re using vs. total available credit—as low as you can.
REASON FOR DECLINE
You’ve filed for bankruptcy.
WHAT IT MEANS
A past personal or business bankruptcy may affect your chances of securing new credit.
WHAT YOU CAN DO
In the coming months and years, work to improve cash flow, boost revenue, cut expenses and improve your credit score. You can also look into a Community Development Financial Institution (CDFI) loan, which may have different requirements.
YOUR BUSINESS
REASON FOR DECLINE
Your business has insufficient revenue.
WHAT IT MEANS
The lender is concerned that your revenue can’t support increased credit.
WHAT YOU CAN DO
Consider a smaller amount or a collateral-backed loan or credit line.
REASON FOR DECLINE
Your business doesn’t qualify.
WHAT IT MEANS
Not every service or business is eligible. For instance, to qualify for certain credit products, Bank of America requires your business to be under current ownership for at least two years. And some products have minimum revenue requirements.
WHAT YOU CAN DO
If your business hasn’t been around long enough, try again when it has. Or consider a CDFI loan, which may have different requirements.
REASON FOR DECLINE
Your business has insufficient cash flow coverage.
WHAT IT MEANS
The lender thinks you don’t have enough cash flow to make payments on new debt.
WHAT YOU CAN DO
Consider a smaller amount or a collateral-backed loan or credit line.
YOUR BANKING RELATIONSHIP
REASON FOR DECLINE
You have sufficient credit with your bank already.
WHAT IT MEANS
Even if you have great qualifications, a bank may not want to exceed a certain amount of credit exposure.
WHAT YOU CAN DO
If you have unused credit lines, close them. If not, you may need to consider other sources.
ADMINISTRATIVE REASONS
REASON FOR DECLINE
It’s a duplicate application.
WHAT IT MEANS
If you’ve applied for the same product within the last 90 days, it’s considered a single application.
WHAT YOU CAN DO
Wait it out.
Getting turned down for business credit is frustrating, but knowing why it happened can help improve your chances next time.
To discuss your needs and find the solutions that work best for your business, please contact a small business banker.
Bank of America, N.A. Member FDIC
Bank of America, the Bank of America logo and LIFE / BETTER CONNECTED are registered trademarks of Bank of America Corporation.
©2018 Bank of America Corporation
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