The Top 3 Reasons Small Businesses Get Denied for Funding—And How to Avoid Them

At Merchant Direct, we review hundreds of funding applications every week. While many businesses qualify and get funded quickly, others run into preventable issues that hold them back. If you’re a business owner thinking about applying for funding—now or in the future—here are the top 3 reasons small businesses get denied (and what you can do about it).

1. Insufficient Time in Business

Many lenders require a minimum operating history to evaluate your financial consistency and business stability. At Merchant Direct, we work with businesses that have been operating for at least 12 months.

✅ How to avoid it: If you’re new, focus on building solid monthly revenue and maintaining good financial habits. When you hit the 12-month mark, you’ll be in a much stronger position to qualify—and we’ll be here when you’re ready.

2. Low or Inconsistent Revenue

Revenue is one of the biggest indicators of a business’s ability to repay funding. We typically require at least $250,000 in annual revenue, with exceptions for industries like construction ($40K/month) and trucking ($75K/month).

✅ How to avoid it: Use business banking consistently, avoid large cash gaps, and keep monthly revenue steady. Even if you’re not quite at the threshold, let us know—we can advise on the best path forward.

3. Disqualified Industries

Some industries are considered high-risk for lending. At Merchant Direct, we currently don’t fund car dealerships, non-profits, check cashing services, mortgage companies, or debt collectors.

✅ How to avoid it: If you’re in a qualified industry but unsure where you fall, just ask. We’ll be honest about your eligibility and help you avoid wasting time with the wrong lender.

The Bottom Line

Getting denied for funding can be frustrating—but it’s often avoidable with the right preparation and the right partner. At Merchant Direct, we take a tailored approach to each client, and we’re transparent about what it takes to get approved.

Thinking about your next move? Let’s start the conversation now—so you’re ready when the time is right.