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Who this lesson is for
Who this lesson is for
This lesson is designed for:
South African SMEs and startups
Informal & formal businesses seeking loans, grants, or private funding
Entrepreneurs who have been declined before and want to improve their chances
Why SMEs Get Declined
Why SMEs Get Declined
Lenders and investors follow risk-based decision models. If your business looks risky on paper, funding is declined — even if the business idea is good.
Below are the most common reasons South African SMEs get declined, and what to do about each one.
1. Poor or No Financial Records
1. Poor or No Financial Records
Why lenders decline you
No income statements or cash flow records
Mixing personal and business money
No proof of revenue consistency
Reality: If income can’t be verified, it doesn’t exist to a lender.
How to fix it
How to fix it
Start tracking income and expenses monthly
Separate your business and personal accounts
Use simple tools (Excel, Wave, Sage, or even a notebook if informal)
✅ Minimum required:
6 months bank statements
Basic cash flow summary
To qualify at Lulalend, you need:
1+ years operating in South Africa
R500,000+ Annual revenue
2. Weak or Incomplete Business Plan
2. Weak or Incomplete Business Plan
Why lenders decline you
No clear business model
No market explanation
No growth or repayment strategy
A lender isn’t funding your idea — they’re funding repayment ability.
How to fix it
How to fix it
Your business plan must clearly answer:
What do you sell?
Who buys it?
How do you make money?
How will funding grow revenue?
📌 Tip: Avoid long theory. Focus on numbers and execution.
Lulalend Purchase Order Loan Available.
3. Cash Flow Problems (Even If You’re Profitable)
3. Cash Flow Problems (Even If You’re Profitable)
Why lenders decline you
Sales exist, but money comes in late
Expenses are higher than monthly income
Business can’t handle repayments
Profit does NOT mean cash flow health.
How to fix it
How to fix it
Shorten payment terms
Reduce unnecessary monthly expenses
Match loan repayments to cash inflow cycles
Up to R5 million in business funding, fast.
4. Poor Credit Profile (Personal or Business)
4. Poor Credit Profile (Personal or Business)
Why lenders decline you
Missed payments
Defaults or judgments
No credit history at all
In SA, your personal credit affects your business funding, especially for SMEs.
How to fix it
How to fix it
Get your credit report (TransUnion, Experian)
Pay small debts consistently
Avoid applying everywhere at once (it hurts your score)
Upto R5million in business funding available. It's fast, simple. It's Lula.
5. No Clear Use of Funds
5. No Clear Use of Funds
Why lenders decline you
“I need money to grow” (too vague)
No breakdown of how funds will be used
Funding without a plan looks like financial stress, not growth.
How to fix it
How to fix it
Always specify:
Equipment purchase
Stock expansion
Marketing investment
Working capital
📊 Example:
R50,000 → stock → increased monthly revenue → repayment capacity
Up to R5 million in business funding, fast.
6. Business Is Too Young or Unstable
6. Business Is Too Young or Unstable
Why lenders decline you
Why lenders decline you
Inconsistent income
No operational track record
How to fix it
How to fix it
Start with small funding amounts
Use alternative lenders or grants
Focus on stabilizing revenue first
⏳ Patience = better funding terms later
We've been working with SMEs like you since 2014 and we've turned our insights into two funding solutions, a Cash Flow Facility and a Fixed-Term Funding solution.
7. Applying for the Wrong Type of Funding
7. Applying for the Wrong Type of Funding
Why lenders decline you
Applying for loans instead of grants
Seeking long-term finance for short-term needs
Applying to lenders that don’t fund your industry
How to fix it
How to fix it
Match funding to purpose:
Short-term → working capital
Long-term → equipment or expansion
Early-stage → grants, incubators, angels
Up to R5 million in business funding, fast.
Quick Self-Assessment Checklist
Quick Self-Assessment Checklist
Before applying, ask yourself:
✔ Do I have 6 months bank statements?
✔ Can I explain my cash flow clearly?
✔ Do I know exactly how the funds will be used?
✔ Can I afford repayments without stress?
If you answered NO to more than one → prepare first, apply second.
Repay as soon as you like and save. No early repayment penalties. It's fast, simple. It's Lula.
Final Takeaway
Final Takeaway
Funding declines are feedback, not failure.
Every “NO” points to:
What needs fixing
What lenders care about
How to improve your next application
📈 Prepared businesses get funded.
Learn4Growth helps South African SMEs understand business funding, improve revenue, and qualify for loans from banks and fintech lenders.
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