What banks don’t tell SMEs about getting loan approvals?

For many small and medium businesses (SMEs), dealing with banks feels like a game of chance. You submit your paperwork, wait for an answer, and sometimes all you get is a blunt "NO" with no clear explanation. Why? Because behind closed doors, getting a loan approved isn't just about the numbers on your balance sheet, it's way more than that.

Based on my 18 years of experience in credit approval (including as Head of Underwriting), here are a few things banks don't openly tell SME clients but every entrepreneur should know and keep in mind.

🔍 1️⃣ Approval isn't just about the financials
Many entrepreneurs think that if their financial statements look good and the business is profitable, the bank has to say yes. In reality, banks dig deeper and check:

✔️ ownership structure
✔️ management team experience
✔️ past relationship with the bank
✔️ the industry the company operates in (some sectors are structurally "risky")
✔️ macro risks (like exposure to foreign markets)

Even a spotless financial file can get rejected if there are other perceived risk flags.

🕵️‍♂️ 2️⃣ Reputation risk matters more than you think
Banks don't just check the company—they also look at shareholders, partners, associates. Any hint of legal trouble, ongoing lawsuits, ANAF investigations, or even negative media coverage can trigger red flags.

➡️ Tip: Watch your personal and company reputation closely—both offline and online.

📋 3️⃣ The final decision isn't just up to your relationship manager
A lot of clients assume that having a good rapport with their account manager means their loan will sail through. Nope. The final say often goes through multiple internal committees: underwriting, risk management, and sometimes even the board, depending on the loan size.

➡️ Tip: Don't rely only on personal relationships—build a solid file that can withstand independent scrutiny.

⚖️ 4️⃣ Risk tolerance changes over time
Just because the bank approved a similar loan before doesn't guarantee it will do so again. Their risk appetite depends on:

✔️ the economic context
✔️ directives from the bank's headquarters (especially for international banks)
✔️ their appetite for your industry

➡️ Tip: Always check back with updated questions like: "What are the bank's priorities right now?" or "How do they currently view my industry?"

🛠 5️⃣ Negotiating the terms is just as important as approval
Even if you get the green light, the devil's in the details: what collateral is required, what covenants are in the contract, what penalties apply. Many entrepreneurs sign in a rush without fully grasping the long-term impact.

➡️ Tip: Study the loan contract carefully—not just the amount and interest rate!

💬 Bottom line
Loan approval isn't just a numbers game—it's a complex process where perceptions, risks, reputation, and timing all count.

📌 As an entrepreneur, preparing well and understanding how banks think can make your life way easier. And getting help from a seasoned consultant can seriously boost your chances of approval.

Let's make things clearer and fairer for SMEs!