What to do after a bank declines your request

A decline is information, and most of it goes to waste. The owner hears no, concludes the bank did not understand the business, and sends the same file to three more institutions. Six weeks later there are four declines, a set of fresh enquiries recorded against the company, and a file that is harder to place than it was at the start.

Find out what was actually declined

There are three very different answers here, and they call for three different responses.

A policy decline means the request fell outside what that bank does: the sector, the tenor, the minimum or maximum size, the collateral type, an exclusion you were never going to see. Nothing about your business caused it and nothing you change will reverse it. You are simply at the wrong bank.

A structure decline means the bank would lend, but not like this. The amount, the tenor, the facility type or the security did not work. This is the best kind of decline, because it can often be reworked within weeks, frequently at the same bank.

A credit decline means the numbers, the account conduct or the history did not support the request. This one is real, and it takes two to four quarters of work rather than a better explanation.

Relationship managers rarely volunteer which of the three it was, but they will usually confirm it if you ask in those words: was this policy, structure, or the financials? That one question is worth more than another application.

Understand what the market now sees

Egypt's banking market is small and its credit people move between institutions. More immediately, enquiries are recorded at I-Score, and a cluster of them in a short window reads as a company being turned away repeatedly. Space your approaches out, and approach the right bank rather than every bank.

Repair the file, not the pitch

The work is unglamorous and it is nearly always the same list. Route collections through one bank so that credit turnover starts to reflect real sales. Clear small overdue balances and returned items, and let three to six clean months accumulate. Bring the corporate documents current. Produce one set of accounts you are prepared to stand behind, reconciled to the tax position, with the differences explained rather than buried. Reduce related-party transactions, or at least document them properly. Put an aged receivables listing in place and start collecting the oldest balances. Agree a drawing policy and hold to it.

Two quarters of that changes a file more than any amount of negotiation.

Consider that the ask may have been wrong

Sometimes the committee was right. If the business genuinely cannot service the debt out of its own cash flow, the answer is not a different lender at a higher margin — that is the version of this story that ends badly. The alternatives deserve a serious look: a smaller facility matched to the actual working capital gap, supplier credit, leasing the equipment instead of borrowing for it, a longer tenor, bringing in equity, or slowing the expansion by a year. A business that funds growth at the pace its cash flow allows is one a bank will want to lend to later.

Re-apply with a changed file

When you go back, go back with something different, and say what it is: here is what you raised, here is what we did, here are six months of statements that show it. Committees remember files. A second submission that is visibly a new file gets read properly. The same file resubmitted gets the same answer, faster.