The short answer
The six most common reasons are a mismatch between banking and declared turnover, too many recent credit enquiries, cheque returns, existing obligations that are already too high, mismatched details across documents, and an account swept to zero every month. Most are fixable before you apply.
1. Banking turnover does not support the declared turnover
You said ₹2 crore; the account shows ₹60 lakh of credits. The lender cannot verify what they cannot see, so they either size the loan on the lower number or decline.
Fix: give every account statement, route collections through one main account, and prepare a short reconciliation. More here.
2. Too many recent enquiries
Six lenders checked your credit report last month. The seventh assumes six said no, whether or not they did.
Fix: stop applying, wait thirty to sixty days, then make one properly prepared application to a lender who fits.
3. Cheque returns
Even small ones, even a year old. One return in six months gets questioned; three or more usually stops the file, because it reads as either cash flow stress or carelessness — and neither is what a lender wants.
Fix: nothing retrospective. Keep six clean months before applying, and set up balance alerts.
4. Existing obligations are already too high
When EMIs take more than roughly half of assessable income, there is no room left however good the business looks.
Fix: clear the smallest obligation first — it frees more capacity than partially paying a large one. How FOIR works.
5. Details do not match across documents
The address on your GST certificate, your Udyam registration, your bank records and your utility bill should agree. Name spellings should match between PAN and Aadhaar. Every mismatch is a question someone has to answer, and files stall while that happens.
Fix: spend an afternoon on this before applying. It is dull and it saves weeks.
6. The current account is emptied every month
What feels like efficient cash management reads to a lender as a business with no buffer. Maintaining a modest average balance for three months genuinely changes how the file is assessed.
The reasons nobody tells you
Two more, rarely stated in a rejection letter. Sector appetite — the lender has simply stopped writing new business in your industry this quarter. And profile fit — your file went to a lender whose credit policy was never going to accommodate it. Neither is about you, and both are avoidable by matching the file to the lender before applying rather than after.
Free, and it does not ask for your phone number.
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