Why SME loan applications fail at credit committee

By the time a request reaches a credit committee, the owner is no longer in the room. What sits in front of the committee is a memorandum: a few pages of numbers and ratios, an I-Score extract, a summary of how the account has behaved, and the relationship manager's recommendation. Everything the committee believes about your business, it believes from those pages.

That is the first thing worth understanding about a decline. The committee is not weighing your reputation, your years in the market, or how well you explained yourself at the branch. It is reading a document. Most of the declines I see were decided by what that document failed to say.

Six reasons account for the large majority of them.

The numbers do not agree with each other

Many Egyptian SMEs carry more than one version of their own performance: one for the tax authority, one for the owner, and whatever the bank statements happen to show. When all three reach the analyst's desk, the gaps between them become the story. A company declaring EGP 18 million of revenue on its tax return, presenting EGP 40 million in management accounts and showing EGP 22 million of credit turnover in its statements has not offered three data points. It has offered a reason to discount every figure in the file. The analyst's job is to take the most conservative number that can be defended, and that is the one you will be assessed on.

The structure does not match the purpose

A warehouse financed over three years, or a permanent working capital need dressed up as a seasonal overdraft, will fail even when the business is sound. Credit risk reads structure before it reads the borrower. If the repayment period is shorter than the period over which the asset generates cash, the file carries a refinancing risk the committee has no reason to accept. This is the most common avoidable decline and the most frustrating one, because the same company asking for the same money on the right structure would have passed.

The account behaviour contradicts the application

Statements are the one part of the file the bank did not receive from you, so they carry more weight than anything you submit. Returned cheques, a facility that never comes back to zero, collections arriving in cash rather than through the banking system, transfers to related parties in the same week a facility is drawn — each of these answers a question the committee was going to ask anyway, and answers it badly.

Concentration that nobody addressed

One customer at 60 per cent of sales, one supplier with no alternative, one product, one public-sector contract paying at 180 days. Concentration is not automatically a decline; unacknowledged concentration usually is. A file that identifies its own concentration and explains how the business survives losing that customer reads as competent. A file that leaves the analyst to discover it reads as careless at best.

Borrowing the committee did not know about

I-Score will show it: facilities at three other banks, a personal loan taken to fund the company, a related entity carrying an overdue exposure. None of this is fatal on its own. Finding it after the business was presented as lightly leveraged is.

The file simply is not finished

An expired commercial register, an unclear shareholding, a signatory who is no longer a shareholder, no accounts for the most recent year. This is an administrative decline wearing the clothes of a credit decision, and it is entirely within your control.

What connects all six is that none of them are about whether your business is good. They are about whether the bank can see that it is. The gap between those two things is where advisory work actually sits: not persuading a bank, but building a file that a stranger reading it under time pressure will reach the right conclusion about.

So if you have been declined, the useful question is not which bank will say yes. It is which of these six it was, and whether you can fix it before you apply again.