When a bank loan is denied, individuals or businesses should first review the denial reason and application details. Common issues include insufficient credit scores, poor repayment history, weak collateral, or incomplete documentation. Correcting these factors—such as paying down debt, resolving credit report errors, or providing additional collateral—may lead to reapplying. If reapplication fails, explore alternatives like personal loans, peer-to-peer lending, crowdfunding, or government-backed programs (e.g., SBA loans in the U.S.). Negotiating terms with the bank, such as shorter repayment periods or lower interest rates, is also advisable.

The denial often stems from creditworthiness or documentation gaps. For example, the Federal Reserve reports that 62% of U.S. consumers with credit scores below 580 are denied conventional loans, while those with scores above 720 have approval rates exceeding 90%. Additionally, collateral requirements disproportionately affect small businesses; 45% of applicants lack sufficient collateral, per the U.S. Small Business Administration (SBA). Alternative financing fills this gap: personal loans approval rates average 58%, compared to 20% for traditional loans, according to the Consumer Financial Protection Bureau (CFPB). SBA loans, which require lower credit scores (550+), approval rates hit 70% for eligible applicants. Proactive steps like credit repair (which can boost scores by 50–100 points in 6–12 months) and exploring non-bank lenders significantly improve access to capital. Data from the National Federation of Independent Business (NFIB) shows 33% of small businesses turn to alternative lenders after bank rejections, with 68% reporting improved cash flow within 3 months.