Sometimes a lender just says no. There may be times when a favorable business loan transaction simply isn't in the cards. Despite how positive the discussions may have been, how upbeat the loan officer was about the borrower's prospects for the loan, or how much the lender might have actually wanted to say yes, the borrower's application could still be denied.

50% of the possible replies available to the lender in responding to a borrower's loan request are negative. So, there's a fifty-fifty chance of rejection; and, frankly speaking, those are pretty good odds. However, if and when that negative response comes, the astute borrower should not only listen carefully to the "no" in order to capture exactly how it may have been said, but also to the explanation immediately following.

The borrower should always remember that lenders make decisions based on business, not personality. The lender is responsible for qualifying the loan request within the parameters of his or her financial institution. Therefore, the borrower should not get angry or become hurt or defensive, or say anything that may irreparably damage future opportunities to obtain financing from that particular lender. As the saying goes, 'There's no point in burning your bridges.' Besides, at such a moment, the borrower needs the loan officer's assistance to understand the reasoning behind the lender's rejection.

There are many ways in which a lender can say no. Listening to and analyzing the negative reply to the request is actually the next step in the loan application process. What the loan officer says along with the "no" is vitally important; the borrower can ascertain the explanation, the details, and the analysis of the borrower's position from the lender's point of view.

Perhaps the lender responded in this manner: "No, but…". This may actually present the borrower with an opening to alter the proposal so that it might be possible for the lender to say yes. Often, borrowers only hear the word "no" and immediately shut down, missing the lender's request for another chance to do business.

The phrase "No, unless…" may be no more than a conditional no, which could be changed if the borrower were to meet the lender's necessary additional conditions or terms.

"No, because the borrower…" could mean that the lender has specific objections or reservations which probably can't be overcome. Identifying these problems will help the borrower to improve the loan request for resubmission at a later time or perhaps to another lender.

Conversely, the phrase "No, because the lender…" often points to restrictions of a financial institution that will not allow the lender to make the loan. For instance, the request may be outside the lender's market area, or greater than its lending limit. In such cases, the borrower can actually be encouraged that the loan request is valid and that another lender can probably be found to approve the request.

Sometimes a blunt "No!" should cause the borrower to look objectively at the validity of his or her loan proposal. It may not be realistic to expect that any lender would agree to the financing. Negative responses that come without explanations may indicate fundamental weaknesses in the proposal. The borrower can use this cue constructively to begin redesigning and improving the loan package.

There are as many variations of saying "no" as there are people and situations. Although it may not be the answer that the borrower is seeking, it nevertheless is not without value nor is it irreversible. Listening to the reasons that accompany the rejection is the key to learning how to ultimately get the loan proposal approved. If the loan officer is candid about what influenced the negative decision, the borrower may be able to challenge and overcome the objections.

During the time that financing is being sought, it's important that the borrower continue to update the proposal with fresh information as it becomes available or as it's acquired. The business completes a financial period every thirty days, and the financial record provided to the lender must be constantly revised to include the latest information. Furthermore, if the borrower uncovers any pertinent information about the business, strategy, or industry to support the position put forth in the loan proposal, the application should be updated with this supplementary data. Even if the proposal has already been submitted to the lender, the borrower should forward the additional information for review and consideration.

Every sixty- to ninety days (if the search for financing lasts that long), the borrower should review the entire loan package from start to finish. The proposal should be edited for updated information, corrections, and consistency. During this review process, the borrower can also take advantage of any information or ideas obtained from a lender's negative response. By constantly improving and polishing the proposal, the chances of getting a favorable response can be significantly improved.

Borrowers often lose sight of the fact that there are literally thousands of lenders in the marketplace, both of the traditional and nontraditional varieties. And within these thousands of lenders, there are even more loan officers. The fact that one lender reaches a certain conclusion doesn't automatically mean that it's the final – or even the correct – response. If the borrower feels confident about the merits of his or her loan package, one lender's negative answer certainly shouldn't prevent it from being presented to another candidate. Different lenders have different loan attitudes, different market expertise, and even different levels of acceptable risk. The borrower should keep searching until the right lender – who understands the business and feels comfortable with the management – is found.

Finally, the borrower should recognize that time is a good investment and the passage of it can be healthy for a business. It could be that financing was attempted prematurely. Perhaps an additional year-to-eighteen months of seasoning might improve the chances of loan approval by demonstrating the soundness of the business strategy or other measurements of financial success. An established and stable business track record would not only decrease the lender's exposure to risk, it could also allow the borrower to obtain the sought-after financing from a more favorable position of strength, making it significantly less expensive.

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