Introduction
Most denials happen for painfully predictable reasons. The good news? Each one is 100% fixable—often in a week or less—once you know where lenders see risk. Below are the five deal-breaking mistakes we see every day in Main-Street businesses, plus quick actions that move you from “maybe later” to “approved.”
Need a shortcut?
- Cash-Flow Analysis, and Loan Services tackle every mistake in one swoop.
Mistake 1 — Mixing Business and Personal Money (Capital)
- Open a dedicated business checking account.
- Route every sale into that account; pay only business expenses from it.
- Transfer owner draws after you’ve run payroll and set aside taxes.
- Keep a 60-day paper trail that cleanly separates business cash.
One client, a two-person plumbing outfit, boosted lender confidence overnight simply by moving all deposits into a free business account at their local credit union.
Mistake 2 — Misreading Your DSCR (Capacity)
- 1.25+ = lenders breathe easy
- 1.00–1.24 = borderline; needs compensating factors
- < 1.00 = almost always “decline”
- Run the numbers today—use our free online DSCR Calculator (no email required).
- Boost the numerator: raise prices a few dollars, upsell add-ons, or trim low-margin services.
- Shrink the denominator: refinance high-interest cards or stretch short-term notes to longer terms.
- Get a Comprehensive Cash-Flow—we routinely lift DSCR from 0.95 to 1.30 in 60 days for mom-and-pop shops.
Mistake 3 — Sloppy or Missing Documents (Character)
- Assemble a single, cloud-shared folder with tax returns, YTD P&L, balance sheet, debt schedule, and a one-page use-of-funds statement.
- Label files clearly (e.g., 2024-Business-Tax-Return.pdf).
- Our Loan-Packaging service does this for you and adds a lender-friendly table of contents.
Mistake 4 — Going It Alone Instead of Using a Loan Broker (Conditions)
- Leverage a broker who already knows which lenders love your industry and loan size.
- Submit one master package—your broker shops it quietly, protecting your credit score.
- Compare term sheets side-by-side and negotiate from a position of strength.
We recently placed a $75k working-capital line for a three-employee café that two big banks had declined. By sending the same file to a community lender that prefers food-service deals under $100k, we secured approval in eight business days.
Mistake 5 — Guessing Your Numbers (Confidence)
- Automate bookkeeping (QuickBooks, Xero) and review five core metrics monthly: Revenue, Net Profit, Cash-on-Hand, DSCR, and Debt-to-Income.
- Summarize them in a one-page “State of the Business” sheet; attach it to every application.
The 5 C’s of Credit—Your Final Checkpoint
| C of Credit | What It Means | Where You Just Fixed It |
|---|---|---|
| Capacity | Cash flow & DSCR—ability to repay | Mistake 2 |
| Capital | Owner’s equity & clean separation of funds | Mistake 1 |
| Collateral | Assets that secure the loan | Covered during brokering (Mistake 4) |
| Conditions | Industry, loan purpose, economic climate | Matched via broker (Mistake 4) |
| Character | Track record & completeness of docs | Mistake 3 & 5 |
A deeper dive into the 5 C’s is coming in its own post. For now, this checklist alone puts you ahead of 80% of applicants.
Ready for the Easy Way?
Book your complimentary strategy call now and let Business Lending Advocate put you on the fast track to Approved!
