Answer: As you know, SCORE is not in banking business and our response is based essentially on reports we receive from our clients who turn to us disappointed by the reception they get at their banks. We venture to say that the majority of the refusals go back to the clients’ lack of evidence of their ability to repay their loans on terms specified by the banks. At SCORE we see such situations most often in starting businesses but they are not uncommon in established enterprises which find themselves in a cash crisis and hope that a loan will pull them out of their difficulties.

The first thing a loan officer at a bank wants to know is what the loan is for. We see clients showing us their loan applications where they ask for amounts grossly exceeding their actual business needs in order to cover their living expenses or mortgage payments in the first year or a few years after opening a business. These clients fail to appreciate that such loans present a very poor risk for a bank and as a rule are declined. We also see owners of established and otherwise sound businesses, when facing a financial crunch, preparing hastily and haphazardly their loan applications and end up creating an impression of instability and lack of planning, detectable easily by a loan officer.