Getting a business loan declined hurts – especially when you’ve got plans to grow your business or bills to cover. But it doesn’t have to be final. For many WA businesses, rejected loan applications are more about presentation or timing than viability. With some adjustments, you can reapply with confidence.
Here, we walk you through the 5 most common reasons loans get declined, what you can do to fix them, when it’s right to reapply, and how Southshore Finance’s business loan broker services can support you every step of the way.
Why Lenders Reject Loan Applications (And Why It’s Often Reversible)
In lending assessments, banks and financiers tend to follow a familiar checklist: your ability to repay, the security offered, credit history, capital, and how well your documents support your story. If any of those areas is weak, or unclear, the application is likely to come back “declined”.
That said, a decline is rarely a permanent verdict. In our experience working across the Perth market, making targeted changes or re-packaging your application can often go a long way in helping you re-apply, and getting you set up with the finance you need.
Top 5 Reasons Loan Applications Are Declined
1. Credit History Issues (For Either Directors Or The Business)
Lenders look closely at both the director’s personal credit profile and the business’s credit file. Even if your business is trading well, negative marks on your or your company’s credit file, like defaults or multiple recent applications, weaken the case.
Fix it by: Obtaining your credit reports (Equifax, Illion, Experian), correcting errors, clearing defaults, and avoiding multiple applications at once.
2. Weak Cash Flow / Serviceability
If your financials or bank statements don’t comfortably show capacity to service repayments, lenders will raise flags. Seasonal volatility and unaccounted expenses often hurt here, and this is a common reason lenders view the risk as too high.
Fix it by: Revising your cash flow forecasts, reducing the requested loan size or extending the term, and including clean, up-to-date BAS, P&L, and bank statements.
3. Inadequate Security
Lenders want assurance that the loan is adequately backed. Lenders often require tangible backing (property, equipment, etc.). If the security offered is mis-aligned with their criteria, or PPSR registrations are unclear, your application may be bumped.
Fix it by: Adding stronger assets, lowering the loan amount, or ensuring PPSR registrations are up to date and clearly prioritised.
4. An Unconvincing Business Plan
If it’s unclear how your business generates revenue, and your business plan is vague about revenue, margins, cash flow or how the loan will be used, lenders may hesitate to back you.
Fix it by: Building a concise, finance-ready plan (5–7 pages) that clearly outlines your operations, revenue model, margins and pipeline. Support with contracts, purchase orders or renewal schedules.
5. Too Much Existing Debt
When most of your cash surplus is already spoken for by current loans, lenders may see little room for another loan repayment. Stacked short-term loans or heavy overdraft use are common issues here as they often link to a high level of existing debt that lenders often view as high risk.
Fix it by: Consolidating debt, refinancing to longer terms, or closing unused credit lines to improve your cash flow headroom.
When To Reapply If Your Business Loan Is Declined (Don’t Rush It)
Being declined isn’t the end of the road – but pressing “send” on your next loan application too early can be counterproductive. Each application shows up on your credit file, and too many in a row can alarm lenders, so it’s important to take a close look at your application before attempting to apply again.
Before you reapply:
- Let your improvements appear in the numbers. Only submit once your bank statements, BAS, and financials reflect positive change.
- Confirm updates are recorded. Changes in credit reports or PPSR can take time to appear — double-check before reapplication.
- Show consistency. A clean run of accounts and steady payments helps build trust with underwriters.
Quick Guide On What To Do Next
Now you’ve assessed the possible reasons your business loan was declined, it’s time to work out what action you need to take to improve your application for the next attempt.
| Possible Reason For Decline | What You Do Next |
|---|---|
| Credit history | Fix errors, settle defaults, pause new applications, maintain clean conduct. |
| Cash flow | Adjust loan size or term, push margins, provide updated BAS and forecasts. |
| Security | Add assets, reduce the amount asked, tidy PPSR registrations. |
| Business plan | Write (or update) a clear, focused 5-7 page business plan for your business, with attached contracts, proof of sales pipeline (where applicable), and reconciled financials. |
| Existing debt | Refinance, consolidate, close unused facilities, and improve cash flow drive. |
How Southshore Finance Can Help
With over 30 years specialising in business finance broking across Perth and WA – and a team of business loan brokers experienced in healthcare, trades and asset-intensive industries – we understand exactly what lenders in this market require. If your loan was declined, here’s how our business finance broker services can help:
- Review declined applications to pinpoint the weak spots.
- Assist you in repackaging your application file to emphasise strengths.
- Match your situation to the right pool of lenders whose policies and profile better align to your situation.
- Support you in refinancing to better terms once your position strengthens (where applicable).
Declined funding doesn’t have to derail your plans for growth, or spell disaster for managing your expenses. With the right preparation and support from the right team, you can reapply on stronger footing and cover your financial needs with confidence.
Ready to reapply with a stronger case? Contact Southshore Finance today to discuss your options.