When you're applying for a business loan, you'd logically think a lender's "no" would sound the death knell to your chances of obtaining financing from that lender. But according to Charles H. Green, author of The SBA Loan Book (Adams Media), "no" doesn't have to be the end of the line for your loan.
"There are many ways a lender can say no," Green notes. "Listening to and analyzing the negative reply to the loan request is the next step in the loan application process." Following are some of Green's translations you can use when interpreting a lender's rejection:
- "No, but . . . " often indicates the lender is providing ways you can change the answer to "yes."
- "No, unless . . . " means it's time to get to work meeting specified conditions or agreeing to more restrictive terms.
- "Not yet" means the banker is probably not comfortable with the business's level of success, or there isn't enough information on the strength of a trend to justify expansion plans. But it's an open invitation to try again when your sales or the market mature.
- "No, because the borrower . . . " can sometimes signal that there are objections by this lender you cannot overcome. Find out what these objections are to help you refocus your loan application before you apply to another source.
- "No, because the lender . . . " often means restrictions within the institution prevent the lender from saying yes. These restrictions could be related to market area or lending limits. Green says this answer typically signals that the loan request is valid but that the entrepreneur will have to try another source.
- "Hell no." A clear signal it's time to re-evaluate your loan request.
Once you've received a "no," Green suggests making an appointment to talk with the lender--not necessarily to change the decision but to get specific information about the objections. With good information from the lender, you can make the changes needed and resubmit to that particular institution again--or at least have a stronger loan application to submit to someone else in the future.