Turned down
on turnover
Turnover thresholds on our panel start at around £30,000 a year, with one lender wanting £60,000 and about £5,000 a month. If a bank declined you on turnover, it applied one threshold. Ours are not all the same, and several are lower than a high street bank’s.
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The ratio matters as much as the figure
Lenders size a loan against revenue rather than profit, and as a rough guide across our panel, asking for more than about a quarter of annual turnover invites questions. A business turning over £200,000 asking for £30,000 is routine. The same business asking for £90,000 needs a reason.
That cuts both ways. If you were declined for the amount rather than the business, asking for less is often the fix, and nobody at the bank will have told you that.
Seasonal trade is frequently misread
An automated decision made in your quiet quarter can read a seasonal business as a shrinking one. If your turnover is lumpy, that is worth saying at the outset rather than leaving the figures to speak for themselves, because a human underwriter can take it into account and an algorithm will not.
Where turnover matters least
Revenue-based funding is sized on card takings rather than on filed turnover, and invoice finance is sized on your debtor book. Both can work where a turnover threshold has blocked a conventional loan, because both are lending against something specific rather than against the business as a whole.
Which turnover figure is being read
There are three versions of your turnover, and lenders do not always use the one you would pick. Filed accounts show the last full year, which may be well out of date. Bank statements show what has actually come in lately. VAT returns sit in between.
If the business has grown since its year end, the filed figure undersells it, and an automated decision will usually take the filed figure. Recent management accounts, or simply pointing to the last six months of statements, can close that gap. It works the other way too: if sales have fallen since the accounts were filed, the statements will show it.
Money in the account that is not turnover
Underwriters strip out anything that passes through the account without being trade. A transfer from a personal account, a director paying money in, a grant, a tax refund or a loan drawdown all swell the credits on a statement without being sales. If your account looks busier than your turnover, this is usually why, and it is better to know before an underwriter points it out.
Common questions
Does turnover include VAT?
Turnover in your accounts is shown net of VAT, and that is the figure most lenders mean. Bank statements show gross receipts with VAT included, so for a VAT-registered business the two will not match. A lender reading statements allows for this, but it is worth knowing if your own sums disagree with theirs.
Can I combine the turnover of two of my companies?
Not usually. Each company borrows on its own figures, because the lender is lending to one legal entity. A group with a holding company and consolidated accounts is different, and some lenders will look at it as a whole, often with each company guaranteeing the others.
Does it help if turnover is rising quickly?
Yes, where a person reads the file. A company that turned over £40,000 last year and is now banking £8,000 a month is a different prospect from what the annual figure suggests, and the statements prove it. Where the decision is automated against filed accounts, growth since the year end is invisible, which is one reason a turnover decline deserves a second opinion.
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