Why cash flow lenders say no
Unsecured cash flow lenders repay themselves from your turnover, often with daily or weekly debits, so the application lives or dies on your bank account. The usual reasons for a decline are the same across the category:
- A short trading history, or an ABN that is too new for their policy.
- Turnover below their minimum, or a recent drop in sales.
- Irregular or seasonal deposits that make the average look weaker than the year really is.
- Dishonoured payments or days where the account was overdrawn.
- An ATO debt or a payment plan showing in the statements.
- Existing daily or weekly repayment loans already on the account, often called stacking.
- Defaults or other marks on a credit file.
- An industry that sits outside their lending policy.
- Cash takings that never reach the bank account, so the business looks smaller than it is.
Cash flow lenders people come to us from
If one of these lenders declined your application, or it stalled, the reason is usually tied to the type of lending they do. Here is a neutral summary of each.
| Lender | What they offer |
|---|---|
| Prospa | Unsecured small business term loans and a line of credit |
| Bizcap | Fast business loans for SMEs, mostly unsecured cash flow lending |
| Lumi | Unsecured business loans and lines of credit |
| OnDeck | Unsecured working capital loans |
| Moula | Unsecured loans and a line of credit assessed on trading data |
| Shift | Overdrafts, lines of credit, trade finance and cash flow funding |
| Lendmigo | Invoice finance and credit lines |
| Octet | Trade finance, debtor finance and working capital for B2B businesses |
With unsecured term loans, a decline usually traces back to bank statements and turnover. With invoice and debtor finance, it more often comes down to the debtor book or the invoices on offer. With overdrafts and credit lines, it can come down to the limit the trading history will support. None of those questions apply to a loan secured by property.
How the equity solution answers each decline reason
An Equity Tap loan is secured by residential or commercial property and repaid from a defined exit, so most of the reasons above simply do not come into it.
| Why the cash flow lender said no | How a property-secured loan looks at it |
|---|---|
| Too new, or not enough trading history | New businesses and sole traders can be considered when the equity and the exit are clear |
| Turnover too low or falling | The loan is repaid from a sale, refinance or incoming payment, not from daily turnover |
| Seasonal or uneven deposits | No daily or weekly debits, and eligible loans can have up to six months with no scheduled payments |
| Dishonours or overdrawn days | We do not ask for bank statements |
| ATO debt or a payment plan | Clearing the tax debt can be the purpose of the loan |
| Existing daily-repayment loans | Paying them out can be the purpose of the loan |
| Credit file defaults | No credit check at initial assessment, and a low score is not an automatic cut-off |
| Industry outside their policy | The assessment centres on the property, the purpose and the exit |
| Cash takings not banked | Bank statements and financials are not part of a property-secured assessment |
Unsecured loans suit plenty of businesses
A cash flow loan can be a sensible fit for a business with strong, steady deposits that wants a smaller amount quickly and does not want to offer property. The equity solution is for the owner who has real estate with equity in it, needs a larger amount or a different repayment shape, and has a clear way to repay within one to twelve months. Loans run from $50k to $5m, with pricing based on your individual circumstances and the sharpest rate available for your situation.
Your next 24 hours after a decline
- Write down the reason you were given. Even a short answer tells you what the next lender should not focus on.
- Pull together the property facts: the address, who is on the title, the current mortgage balance and the lender.
- Put a number on the need: the amount, who it is going to and the date it must arrive.
- Name your exit: a property sale, a refinance once the pressure eases, or a business payment you are waiting on.
- Call Equity Tap on 1300 123 024 or apply online. You will speak with the team that makes the lending decision, and eligible loans can be funded in as little as 24 hours once approved.
If your application was not declined but dragged on, changed shape or was cut at the last minute, read messed around by a cash flow lender. For the broader comparison, see our secured alternative to cash flow loans and the guide to an unsecured business loan decline.
Frequently asked questions
Prospa declined my application. Can Equity Tap still help?
Will a recent decline stop you approving my loan?
Can a secured loan pay out my existing daily-repayment loans?
Do I need two years of trading?
Will you ask for my bank statements?
Brokers: send the scenario through the Equity Tap broker channel and you will deal with the same lending team.