Posted: Tuesday, 8 April 2025 @ 10:56
Even the most experienced broker can find it frustrating when funding applications fail. Each funder has its own criteria and specific requirements and keeping track of them when you're processing lots of requests isn't easy. However, not getting those applications through first time means more time and resource on your behalf. So, when it comes to Rivers, what are the top reasons funding applications fail and what makes a perfect submission?
Top reasons funding applications fail
While it sounds obvious, the top reasons funding applications fail is that they simply don't meet our minimum criteria. However, by understanding the way we work you can find ways to ensure the application addresses any shortcomings. At Rivers, our minimum criteria for business loans and other funding solutions are:
- At least one company Director or shareholder is a UK homeowner
- You are a limited company or LLP
- You are registered in England or Wales
- The minimum trading time for short-term loans is three months, for all our other business lending solutions it is six months.
Insufficient equity
Beyond that, the most common reason funding applications fail is because of insufficient equity, but there are options. At Rivers we do both secured and unsecured borrowing, but we do ask that there's a UK homeowner as a guarantor, with pound for pound equity to match the borrowing. Typically, this person would be a majority shareholder in the business.
However, if the business owner or their guarantor doesn't have enough equity for the requested amount, it doesn't necessarily mean that the answer will be a flat no. It might mean that we offer a smaller amount than requested. Alternatively, we will accept a minority shareholder or third-party guarantor with sufficient equity, where a lot of alternative lenders won't. What is necessary is that they are a UK homeowner, and they must have a reasonable rationale for why they're willing to put themselves forward to support the loan.
Location of the business
One of our minimum criteria is that businesses are registered in England or Wales, but we get a lot of loan applications from those incorporated in Scotland. As things stand, these are not loan applications we are able to approve.
Active County Court Judgements (CCJs)
Active CCJs are another reason why business loan applications fail. This includes personal defaults or personal CCJs. If the CCJ has been satisfied, then we can consider the loan application depending on individual circumstances.
How to submit the perfect funding application
When businesses apply for funding it's understandable that they want a quick answer, so they can get on with growing and running their organisation. A good business funding application isn't just more likely to be approved, it's also more likely to get a quick answer. A common reason why funding applications take a long time to approve is when they don't include everything our underwriters need to assess it straight away.
A perfect funding application includes:
- Six months of bank statements (unless you haven't been trading for six months).
- Full financial accounts for the most recent financial year end, as recorded at Companies House.
- A Rivers proposal form, which includes information on the Board of Directors, the company registration number, company details, and why you want the loan.
It's also worth being aware of other things that are likely to impact the loan application, such as:
- An unpaid overdraft facility
- Other lender debt
- Outstanding Director Loans owed by the company
- Business Credit Card debt
All the information we need is included in our proposal forms, and if it's included in the funding application on day one then we will respond with an answer within 48 hours (working days) and get funds to you or your client ASAP. We have even been known to process applications from submission to releasing funds within 48 hours!
How many of your Rivers funding applications were successful in the last three months? Find out your success rate and how to get even more signed off.
Contact the Rivers team