The bank said no. The next lender may well say yes.
A bank declining a facility is a statement about that bank’s credit appetite on the day, not a verdict on your business. A clearing bank lends to a policy, and a request can miss the policy for reasons that have little to do with whether the company is a sound borrower: leverage a shade above the grid, a sector on a cautious list, one soft year in the numbers, or a centralised credit score that never met the management team. The company a high-street bank passes on at 3.2 times is often the same company a private-credit fund funds comfortably at 4 times, because the two lend to different rules. So a decline is the start of a process, not the end of one. There are three practical moves after a no: read what kind of no it was, resolve what the file exposed, and take the credit to the lender categories built for it. This guide walks each one, from the borrower’s side of the table, at August 2026 rates.
Written for the borrower’s side of the table. This is general guidance, not advice on your specific facility. It deepens the shorter answers in our working guide.
Usually it is appetite and policy, not a judgment on the business.
Most declines at this size come down to appetite and policy rather than a finding that the company cannot service debt. A clearing bank runs a credit grid, and a request that sits outside it is declined even where the business is plainly viable. The most common trigger is leverage: mainstream bank and cash-flow senior debt is customarily sized around 2.5 to 3.5 times EBITDA, so a structure that needs 4 times to work is not a weak credit, it is a credit for a different lender. This is careful underwriting doing its job, not a slight on the applicant.
Sector policy is the second reason, and the most impersonal. A bank periodically dials back exposure to particular sectors across its whole book, so a good business in construction, hospitality, care or property can be declined on a portfolio decision it had no part in and cannot argue with. That is prudent management of concentration risk rather than a comment on the individual borrower, and it is precisely the kind of no that another lender, one not already heavy in the sector, will not share.
The third is a soft patch in the recent numbers read conservatively: a single loss-making year, a large one-off cost, a stretched debtor book, a covenant that looked tight on the last accounts. And the fourth is structural to how large banks underwrite at the smaller end, where a centralised credit model scores the application on data and the relationship manager who knows the story has limited room to override it. None of these means the company is unbankable. They mean the request, as framed, missed this bank’s rules, and a decline rarely arrives with the reason spelled out, so part of the work is inferring which of the four it was.
There are three kinds of no, and each points to a different move.
A useful first step is to work out which of three kinds of no you received, because each points somewhere different. A policy no means the credit is sound but sits outside this bank’s rules on leverage, sector or ticket, and the move is to take the same request to a lender whose rules fit. A presentation no means a fundable request arrived in a shape the credit committee could not get comfortable with, thin forecasts, an unexplained dip, no clear repayment story, and the move is to re-present rather than to lower the ask. A credit no means the structure genuinely asks for more than the cash flows support, and the move is to resize or restructure before approaching anyone.
Telling them apart takes a little detective work. Banks are not obliged to give detailed reasons, but a relationship lender will usually indicate informally whether the block was policy or credit, and the questions the process pressed hardest are the tell. A run of queries about the sector points to policy; queries about the forecast and the repayment path point to presentation; queries about the sheer size of the request against earnings point to credit. It is worth asking the question directly, because the answer changes what you do next.
Getting the diagnosis right saves the wrong effort. Re-presenting a policy no to a dozen more clearing banks wastes a quarter and tires the file; shopping a credit no around the market invites a run of declines that a later lender can see and read. The categories and the re-presentation both come later on this page. The diagnosis comes first, because it decides which of them you need.
Appeal when the no was presentation, and bring something genuinely new.
You can appeal, and it is worth doing when the decline was about presentation rather than policy. Larger banks have an internal review or escalation route, and some are obliged to consider a request to reconsider, but an appeal only moves a decision when it carries something the first submission did not: a fuller forecast with the assumptions shown, a clean explanation of the year that looked soft, a repayment story the committee can underwrite, additional security, or a request resized to sit inside the grid. The same file argued more forcefully changes nothing.
In practice an appeal that succeeds usually does one of four things. It reframes the number, so that the same £6m split into a smaller term loan and a committed line reads as more disciplined than a single lump. It de-risks the story, so that a large one-off cost stripped out and evidenced turns a covenant that looked tight into one with room. It adds cover, where a debenture, a charge, or in some cases a personal guarantee changes the credit’s shape, though a guarantee is a decision to weigh carefully, as our guide to personal guarantees sets out. Or it corrects an error, because centralised scoring works off data, and stale or wrong data is worth challenging directly.
What an appeal cannot do is overturn a policy no. If the block is leverage appetite, or a sector the bank is stepping back from, no amount of re-presentation moves it, because the constraint is the bank’s portfolio rather than your file. That is the point to stop pushing on a closed door and widen the search to the lender categories that price the credit differently, which is the next question.
A duty on the big banks to offer to pass a decline to referral platforms.
The Bank Referral Scheme is a government measure that requires the UK’s largest banks, when they turn down a small or medium business for finance, to offer to pass the application, with the business’s consent, to designated finance platforms that connect borrowers to alternative funders. It was introduced in 2016 so that a bank decline need not be the end of the road for a viable company, and if your bank offers the referral, saying yes costs nothing and closes nothing off.
For a £3m to £15m structured facility, though, the scheme is more useful to know about than to lean on. The platforms it feeds are built for smaller, simpler tickets, largely automated and product-led, and a lower-mid-market request that carries a covenant package, a security structure and a real repayment story is not the shape they route well. Treat the referral as a backstop worth accepting rather than as the plan. At this size the market is intermediated deliberately, and the credit is better taken to named lenders in the right categories and run as a proper process, which is what the rest of this guide describes.
Three lender categories price the same credit on different rules.
The credit a high-street bank passes on usually fits one of three other lender categories, each underwriting to different rules. Pricing across all of them is set over SONIA, which sat at 3.73% on 2 July 2026 against a Bank Rate of 3.75%, held at the Bank of England’s June meeting. Bank of England, Bank Rate. What differs between the categories is not the base rate but how much each will lend against it and how it reads the risk.
Challenger and specialist banks
Challenger and specialist banks offer broadly the same senior debt as the clearing banks, with a wider appetite. Many are built around particular sectors or structures the mainstream steps back from, and more of them underwrite on the relationship and the management team rather than a centralised score, so a credit declined on policy grounds alone often clears here on terms close to those the first bank would have offered.
Private-credit funds
Private-credit funds lend against cash flow at leverage the banks will not reach, customarily 4 to 4.5 times EBITDA and up to around 5 times of total debt, where mainstream senior sits nearer 2.5 to 3.5 times. That extra capacity is priced for: a unitranche margin runs around SONIA plus 550 to 800 basis points against a bank’s low single-digit spread, often with a small original issue discount that funds the loan at 98 to 99, in exchange for a single facility, a covenant-loose package and speed. For a credit declined purely on leverage this is frequently the natural home, and the trade-off is set out in our guide to bank versus private credit.
Asset-based lenders
Asset-based lenders read the balance sheet rather than the profit line. An ABL facility advances against a borrowing base, customarily 80 to 90% of eligible receivables plus agreed rates against inventory and plant, so a soft trading year that troubles a cash-flow lender matters far less where the assets are there to secure the loan. For an asset-heavy or working-capital-intensive business declined on the P&L, this route can release more than a cash-flow facility of either kind, as our guide to asset-based lending explains.
The common thread is that flexibility and appetite cost more than a clearing bank’s cheapest senior debt. That is the real decision after a decline: not whether capital is available, because at this size it usually is, but which category fits the credit, and what the extra flexibility is worth paying for.
Present a resolved credit to the right lenders at once, not the same ask again.
The reliable way to turn a decline into an approval elsewhere is to resolve what the first process exposed and take a finished credit to several fitting lenders at once, rather than to whoever answers next. A lender says yes to a request it can underwrite without doing your work for it: a monthly forecast across a full cycle with the assumptions visible, the soft year explained and evidenced, a repayment or deleveraging path it can follow, and a structure matched to the need rather than a single round lump.
Two things separate a pack that clears from one that scrapes in. The leverage is set where the chosen category actually lends, so the request does not ask a bank for fund leverage or a fund for bank pricing. And the covenants are proposed with real headroom, customarily 25 to 30% against the plan, so the first bad month does not trip a breach, and a structure with room to move reads as a considered credit rather than one run to the edge. Sizing the request to what the cash flows genuinely support is the same discipline from the other side, which our guide to how much your business can borrow works through.
The other discipline is process. Approaching lenders one at a time, waiting for each answer before the next, turns a soft patch into a run of visible declines and hands whatever offer does come the only seat at the table. Approaching the right few in parallel keeps the credit fresh, protects pricing through competition, and lets you choose on terms rather than take what is left. Running that quietly and well, and knowing which lenders in each category actually fit the credit, is most of what an independent debt adviser does, and how to choose one is in our guide to choosing a debt adviser.
Sometimes the honest move is less debt, a fixed number, or equity.
Not every decline should be routed around. Sometimes a bank has read a real constraint, and the honest response is to change the request rather than the lender. The clearest case is a genuine over-ask: if the structure needs leverage the cash flows cannot service through a normal year, moving it to a fund that will fund it solves the raising problem and creates a servicing one. Resizing to what the business can actually carry is the better answer, even when a more aggressive lender would say yes.
Two other cases point away from more senior debt. Where the block is a fixable operating issue, a stretched debtor book, one loss-making contract, a working-capital cycle that has drifted, the value is in fixing it first and raising from a stronger position a few months later, rather than borrowing around a problem that then travels with you. And where the money is really funding growth or absorbing risk rather than financing an asset with a clear repayment path, the honest instrument may be equity or a hybrid rather than senior debt at all, a choice our guide to debt versus equity works through.
The test is simple to state and harder to sit with: after a decline, is the request sound and merely at the wrong lender, or is the decline telling you something true about the request? Most declines at this size are the former, a fit problem with a straightforward answer. But a clear-eyed look at which it is, before spending a quarter re-shopping, is worth more than the fastest route to a yes.
We will read the no and find the yes.
If your bank has declined a facility, a first conversation is confidential and costs nothing. We work out what kind of no it was, resize or re-present the credit as the diagnosis calls for, and take it to the lender categories that fit, quietly and in parallel so competition works for you. See how a mandate runs in how we work, or the full range of what we advise on in our services.