# People don’t like to be told no when it comes to finance
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-07-29
Category: FINANCE
Category URL: https://financedigest.com/category/finance
Meta Title: Top Tips for Small Businesses Applying for Loans
Meta Description: Discover expert advice on how small businesses can secure finance without fear of rejection. Understand eligibility factors and alternative funding options.
URL: https://financedigest.com/people-dont-like-to-be-told-no-when-it-comes-to-financehtml

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_By **Scott Donnelly,** Director of Board at CapitalBox_

Nobody likes to be told no, from a child the word is usually accompanied by a feeling of disappointment. For businesses being rejected is equally frustrating, especially when it comes to finance. The fear of being told no can often cause individuals and [businesses alike to avoid](https://www.financedigest.com/uncertain-times-for-uk-landlords-how-to-avoid-insolvency-for-your-property-management-business-in-2020.html "Uncertain Times for UK Landlords: How to Avoid Insolvency for Your Property Management Business in 2020") asking for what they really need or want.

We’re especially not good when it comes to asking for [money or admitting that we don’t know what kinds of finance](https://www.financedigest.com/student-finances-exposed-how-do-they-really-spend-their-money.html "Student finances exposed: How do they really spend their money?") are available. It’s an emotional business, which is why so many smaller companies ask family and friends for money, go deeper into overdrafts or use [credit cards](https://www.financedigest.com/uk-credit-card-borrowing-rises-by-most-since-2005-boe.html "UK credit card borrowing rises by most since 2005 – BoE"). Recent research conducted by CapitalBox found that, as a result of COVID-19, almost 1 in 4 (24%) of European [SMEs asked family or friends for financial](https://www.financedigest.com/forecast-based-financing-for-smes.html "Forecast-based financing for SMEs") help.

Since the 2008 recession, [banks have been wary about lending](https://www.financedigest.com/post-crash-banking-regulation-is-transforming-the-world-of-corporate-lending-for-the-better.html "Post-crash banking regulation is transforming the world of corporate lending – for the better") to small businesses as they have always been viewed as riskier. Now with the [uncertainty around the post-covid economic](https://www.financedigest.com/combatting-economic-uncertainty-in-2023-with-the-payments-sector-2.html "Combatting economic uncertainty in 2023 with the payments sector") recovery, it can still seem virtually impossible to get a loan to grow a small business.

Here are some top tips to small businesses ahead of applying for a loan and looks at what alternatives can be considered to best avoid the disappointment of a no.

**[Understand your business](https://www.financedigest.com/changing-face-b2b-business-practices-understanding-timeless-behaviour-important-ever.html "The changing face of B2B business practices – why understanding timeless behaviour is more important than ever.") and why you are asking**

Understanding your business and the [reason you need](https://www.financedigest.com/5-reasons-why-e-commerce-sites-need-a-token-gateway.html "5 reasons why e-commerce sites need a token gateway") a loan should be the first step. You must take [stock of important factors](https://www.financedigest.com/factors-that-affect-the-direction-of-the-stock-market.html "Factors That Affect the Direction of the Stock Market") that influence what kind of loans you may be eligible for and your chance of acceptance. For example, [knowing what the amount of money to borrow and what it will be used for are the most critical factors when taking out a loan](https://www.financedigest.com/what-you-should-know-before-getting-a-loan-online.html "What You Should Know Before Getting a Loan Online"). After all, if you are unsure about how the money will be used, how can you [expect lenders to assess the risk](https://www.financedigest.com/thomson-reuters-report-reveals-risk-compliance-staff-expect-to-see-significant-benefits-from-artificial-intelligence-ai-and-distributed-ledger-technologies.html "Thomson Reuters Report Reveals Risk & Compliance Staff Expect to See Significant Benefits from Artificial Intelligence (AI) and Distributed Ledger Technologies")?

Assets are a key consideration when finding out whether it is possible to get a secured loan (one backed by assets) or an unsecured loan, which will not require assets but instead uses other criteria such as [financial health](https://www.financedigest.com/how-can-fintechs-better-engage-zillennials-with-their-financial-health-the-answer-lies-in-speaking-to-them-in-their-own-language.html "How can fintechs better engage Zillennials with their financial health? The answer lies in speaking to them in their own language") and turnover. The [ability to put up collateral against your loan](https://www.financedigest.com/student-loans-hurting-workers-ability-to-save-for-retirement.html "STUDENT LOANS HURTING WORKERS’ ABILITY TO SAVE FOR RETIREMENT") will in most cases increase your chance of acceptance.

However, some SME loans can offer more flexibility meaning that factors such as the time the company has been in business, revenue and [credit scores](https://www.financedigest.com/12-things-that-dont-hurt-your-credit-score.html "12 Things That Don’t Hurt Your Credit Score") are weighed in heavily. That can lighten the load of [needed collateral or even make you eligible for an unsecured loan](https://www.financedigest.com/common-uses-for-bridging-loans-and-what-youll-need-to-get-one.html "Common Uses for Bridging Loans and What You’ll Need to Get One").

**Who should you ask?**

Considering who you ask is as crucial to getting a yes as knowing what you want. It is important to [choose a lender](https://www.financedigest.com/mistakes-to-avoid-while-choosing-a-private-money-lender.html "Mistakes To Avoid While Choosing a Private Money Lender") who can support you with the right advice and terms throughout the time span of your loan. Being aware of the documents requested by the lender and each lender eligibility criteria can also help to inform your decision.

Perhaps you [don’t have the information or time needed to get a loan from a traditional bank or are not eligible for governmental small business](https://www.financedigest.com/pitiless-machines-will-kill-your-business-if-you-dont-respond-now-warns-servion.html "‘Pitiless machines’ will kill your business if you don’t respond now, warns Servion") funding. Luckily, there are alternative options from classic [loans and cash advances to credit](https://www.financedigest.com/6-reasons-to-take-a-car-loan-from-a-credit-union.html "6 Reasons to Take a Car Loan From a Credit Union") lines. To support the specific [needs of SMEs](https://www.financedigest.com/what-needs-to-happen-to-improve-the-landscape-for-smes-trying-to-access-finance-options-in-the-uk.html "What needs to happen to improve the landscape for SMEs trying to access finance options in the UK"), financing needs to come from loan providers who can truly understand their challenges. This includes looking at a flexible approach, quick turnaround times, and the ability to leverage technology and [machine learning](https://www.financedigest.com/make-time-to-reshape-the-finance-function-with-automation-and-machine-learning.html "Make time to reshape the finance function with automation and machine learning"). This will [enable these businesses](https://www.financedigest.com/token-enables-bank-direct-payments-for-caxton-fx-consumer-and-business-customers.html "Token Enables Bank Direct Payments for Caxton FX Consumer and Business Customers") to make better decisions. Otherwise, [companies can waste hours if not days applying for loans with lenders who will never say](https://www.financedigest.com/anyone-can-write-assignment-need-people-able-apply-new-skills-workplace-says-top-investment-management-company.html "“Anyone can write an assignment, but we need people to be able to apply their new skills to the workplace,” says top investment management company") yes.

Thinking outside the box, there are multiple types of loans that companies can apply for. For those needing a “quick money” solution, merchant cash advances are an option for companies with a poor [credit score](https://www.financedigest.com/1-in-5-uk-adults-have-no-idea-what-a-credit-score-is.html "1 in 5 UK adults have no idea what a credit score is"). Although these advances tend to be the easiest to get, it is worthwhile to pay attention to the terms to find out how much you will be [paying for this service](https://www.financedigest.com/best-paying-jobs-in-finance-consumer-services.html "Best Paying Jobs in Finance Consumer Services"). Whilst those looking to [bridge the gap between invoice payments can look at invoice financing](https://www.financedigest.com/is-it-risky-to-use-bridging-finance-for-my-business.html "Is it risky to use bridging finance for my business?") to keep cashflow healthy.

**No is not always the** [end of the road](https://www.financedigest.com/exclusive-nissan-seeks-tech-tie-up-without-renault-as-alliance-nears-end-of-road.html "Exclusive-Nissan seeks tech tie-up without Renault as alliance nears end of road")

Even if [businesses take all this into account](https://www.financedigest.com/how-to-compare-business-bank-accounts.html "How to compare business bank accounts"), in today’s climate, avoiding a no is never guaranteed. When companies do get rejected, it is important to take [stock of the potential](https://www.financedigest.com/stocks-becalmed-before-potential-cpi-storm.html "Stocks becalmed before potential CPI storm") reasons why. Doing your [research and asking third-party experts for help can make the process](https://www.financedigest.com/alzheimers-research-uk-streamlines-cheque-processing-with-checkprint.html "Alzheimer’s Research UK Streamlines Cheque Processing with Checkprint") may provide clarity around lenders decisions. Using the information gathered, businesses can then balance and evaluate the best fit for them, giving those applying for the loan the best shot at a success next time around.


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