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What to Do When Your Business Loan Isn’t Enough

By Erin Ryan Reviewed By Elise Moores
By Erin Ryan
By Erin Ryan Reviewed By Elise Moores

Have you ever gone to a lender and been approved for less capital than you wanted or needed? Disappointing, isn’t it? 

Here’s the deal, though: There’s a reason (or a few) you weren’t given the full amount you were seeking. 

Several factors come into play when lenders evaluate you for a business loan. They aren’t just arbitrarily saying, “this is all you get.”

Credit score, industry, length of time in business, existing loans and average daily bank balance are a few considerations. Needless to say, these factors can make it challenging for many business owners to get the funding they need. 

Not surprisingly, 32% of businesses surveyed anticipate credit availability challenges in the next 12 months, according to the Federal Reserve Banks’ 2021 Small Business Credit Survey. With respect to the Paycheck Protection Program alone, 23% of businesses that applied for funding received only a portion of what they requested or nothing at all, based on data from the same report.  

So what can you do when your business loan isn’t enough? Whether you’ve been approved with one lender for less than you anticipated or already have an existing loan and need more funds, here are a few steps you can take to tap into additional capital.

Upside down pink piggy bank with coins falling out

1. Build Payment History

Honest lenders want to be transparent with you, but they also want to make sure they’re repaid. After all, they’re in business too. It wouldn’t be in their best interest or yours to advance you funds you can’t afford to pay back. 

One way to build credibility with your lender is to establish a solid track record of timely payments. You want to form that relationship, so you stand a better chance of getting capital down the road when you need more funds. Lenders will be more apt to work with a merchant who’s been consistent.

2. Look to Renew

When you build a relationship with a lender and demonstrate you’re a reliable merchant, request that your lender renew your funding offer. 

While not typically the case with long-term loans, you could be eligible to renew your funding offer halfway through your repayment term with short-term financing. The benefit to this is that you can pay off your original offer and tap into additional capital to invest back into your business. It’s safe to say, merchants who use their loan renewal funds wisely experience the greatest return on investment

When you renew your offer, you could benefit from one or more of the following:

  • Raised lending amount
  • Extended repayment term
  • Lower rate

Additionally, once a positive relationship is established, it’s not uncommon for renewals to be granted multiple times throughout a lender-merchant relationship. That’s reassuring to many small business owners who may experience seasonal ebbs and flows.

3. Apply for Additional Financing

Another way to access supplemental capital for your business is with a second-lien loan. In this case, a lender will review your outstanding debt and financials to determine if you qualify for and can afford additional financing. 

While you’ll net fewer funds and have shorter repayment terms than you received with your first-position loan, this is an alternative financing strategy that can help you keep business running smoothly.

Additionally, if you qualify, consider a business line of credit. If an emergency arises, you can draw from your credit line as needed, time and time again throughout the term.

Yellow diamond-shaped street sign with 3-pronged arrow and the word “consolidate” along the side

4. Consolidate

On the other hand, consider consolidating debt if your existing business loans are in good standing. Should you qualify, your lender could consolidate a higher-risk deal and possibly replace it with better funding terms. 

Both conventional and alternative lenders offer business debt consolidations. That said, the process to apply and get funded with conventional lenders can be challenging and lengthy. If you place a premium on time, consider the streamlined application process and often same-day funding offers available through alternative, nonbank lenders.

Erin Ryan Staff Writer and Editor at Fast Capital 360
Erin has more than 15 years’ experience writing, proofreading and editing web content, technical documentation, instructional materials, marketing copy, editorials and creative content. In her role at Fast Capital 360, Erin covers topics of interest to small business owners, including sales, marketing, business management and financing.
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