Why Didn’t I Qualify for Alternative Funding?

confused business owner looking at laptop outside small business

If you applied for small business funding from Greenbox Capital® or another alternative lender and did not receive funding, there are a number of reasons why you might not have been approved. Here are some of the most common reasons why we might not be able to fund your business:

  • You’ve had too many NSFs or negative days within a 3 month period
  • Your business doesn’t meet the minimum monthly revenue requirement of $10,000 over a period of 3 consecutive months
  • You operate in a prohibited industry

If your business meets all these criteria but you still were not approved, there are some additional criteria to consider, including your business’s cash flow and what industry you operate in. Let’s take a closer look at these factors:

Alternative small business lenders like Greenbox Capital have more flexible funding qualification requirements than traditional lenders like the SBA, banks, or credit unions, but that doesn’t mean your approval is guaranteed.

Cash flow

When alternative lenders review and evaluate your funding application, they’ll look at the overall health and potential of your business. Cash flow is one of the strongest indicators of your business’s overall well-being, so if you meet the criteria listed above but still didn’t receive funding, it’s time to take a closer look at your business’s cash flow to see if you can spot any problems.

Cash flow problems can include:

  • Too many NSFs or overdraft or negative days—at least 15 over a three month period—or a combination of both
  • At least 9 negative days within a 3 month period
  • Existing advance balances
  • Existing payments that are considered too high to sustain an additional advance or loan
  • Prior default on previous advances

Healthy cash flow with few or no NSFs or overdraft or negative days shows that your business can responsibly manage its financial commitments, making you more likely to be approved for alternative funding. If you suspect that your application may have been rejected due to cash flow issues, take some time over the next few months to focus on maintaining strong cash flow and making payments to existing creditors on time to avoid NSFs or negative days.

Prohibited industries

There are some industries we and other alternative lenders are simply unable to lend to.

Prohibited industries include:

  • Banks, credit unions, mortgage lenders
  • Non-bank finance companies
  • Money services businesses
  • Bail bonding
  • Factoring & purchase order financing
  • Financial transaction processing
  • Credit protection, restoration & repair
  • Collection agencies & debt buyers
  • Debt & tax reduction services
  • Securities & commodities dealers and brokers
  • Real estate brokers or agencies
  • Appraisers & real estate consultants
  • Lessors of estates & real estate “flippers”
  • Call centers & answering services
  • Mailing & fulfillment houses
  • Title companies & escrow agencies
  • Churches (will fund non-profits that are non-religious)
  • Notaries
  • Brokerages
  • Online auction
  • 18-wheel trucking & transport logistics (excluding personal transport i.e. Uber, taxi, non-emergency vehicles)

What can I do if I wasn’t approved for alternative funding?

If you were not approved for alternative business funding, the first thing to do is ask your lender why. There may be something simple you can do to improve your application next time you apply.

Some of the reasons listed above may not be fixable—you can’t exactly change your industry, for example. Other common reasons for disapproval, such as not having a business bank account or having a history of cash flow troubles, can be remedied quickly or over a period of time. Before you reapply for funding, start by:

  • Setting up a business bank account if you don’t already have one
  • Waiting! If you’re a new business, reapply after you’ve been open for at least 6 months.
  • Tracking your monthly earnings and expenses carefully to ensure you’re meeting the minimum monthly revenue requirements.

If you’ve determined that cash flow is your biggest hindrance to receiving funding, there are some actions you can take to improve this as well:

  • Clean up your financial history. Avoid NSFs, overdrafts, and negative days for at least three months before re-applying.
  • Pay off any existing advances and loans. This will show any prospective lenders that you can responsibly manage your existing debts, and it can also improve your credit rating, making lenders more likely to approve your next application.
  • Check your personal and business credit scores for any inconsistencies or errors. Alternative lenders like Greenbox Capital base your approval on more than just your credit score, but your credit rating is still a good indication of your ability to handle new debt and will be considered as part of your application.
  • Do what you can to boost your revenue to ensure that you meet—or ideally exceed—the minimum monthly requirements.

Alternative lenders vs. SBA loans

SBA loans have much stricter qualification requirements than alternative lenders like Greenbox Capital, such as credit score minimums and collateral requirements in addition to detailed financial documentation. It can take up to three years to get approved, and funding is typically only given businesses with excellent credit and strong revenue.

Learn more about small business loan requirements

If you’ve been approved for SBA funding such as a 7(a) loan or COVID-19 programs like PPP or EIDL funding, your SBA lending partner has already reviewed your business’s financial history and qualification criteria in great detail and has determined that your business is strong enough to receive funding that is guaranteed by the federal government. In this case, you’ll also meet or exceed our lending requirements and are more likely to be approved for additional alternative business funding, especially if you received 7(a) or EIDL funding.

COVID-19 Qualification Requirements

Earlier in 2020, Greenbox Capital introduced special guidelines for businesses seeking funding amid the COVID-19 pandemic. We have now resumed normal operating procedures with no special approval guidelines as a result of the ongoing COVID-19 pandemic.

There is one exception to be aware of before you apply (or re-apply) for alternative business funding from Greenbox Capital: if you are on a modification of debit program with another lender due to COVID-19, we cannot fund you until you become current for at least one month. Prior to the COVID-19 pandemic, a modification of debit would have been considered a default and your Greenbox Capital funding application would not be approved.

Wrapping up

There are a number of reasons why alternative lenders like Greenbox Capital may not approve your funding application, including:

  • You don’t have a business bank account
  • Your business doesn’t meet the minimum monthly revenue of $10,000 over a period of 3 consecutive months
  • You haven’t been in business for 6 months or longer
  • Cash flow troubles—you have too many NSFs or overdraft or negative days
  • You have existing loans or advances
  • You’ve defaulted on loans or advances in the past
  • You operate in a prohibited industry

If you did not receive funding, there are steps you can take to improve your application, such as opening a business bank account, closely tracking your monthly revenue, and examining your cash flow history for any potential issues.

Learn more about how small business funding works
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