Declined by Lumi? When a business loan or line of credit says no

There are two kinds of disappointing answer from an online lender. One is a flat no. The other is a yes for an amount so small it doesn’t fix anything. If Lumi gave you either, here’s what tends to be going on, and what you can do about it before the end of the week.

Who Lumi is

Lumi is a Sydney-based online lender that started in 2018. It offers unsecured business loans and business lines of credit. Being unsecured, both lean on the business’s own trading record rather than on property.

Why credit lines and unsecured loans get knocked back or cut down

What follows is how unsecured lending tends to work across the market, not an account of Lumi’s own assessment of you.

The lowest point matters. A revolving line of credit can be drawn at any time, so lenders care about how your account behaves at its weakest. A business that dips into overdraft near the end of each month can look riskier than its turnover suggests.

Limits are worked backwards. The amount offered is usually what the formula thinks your account can carry, not what you asked for. If the room is small, the limit is small.

Director credit counts. For a small company, the director’s own credit file often carries real weight. A default from a few years back, or a cluster of recent enquiries, can push a file out.

Industry and age. Newer businesses, and some industries, get a more cautious limit until there’s a longer track record.

Other repayments. Every existing debit, whether a car loan, equipment finance or another online loan, eats into the space for a new one.

What to do before Friday

• Decide what the money is actually for. One bill? Or a recurring squeeze? That decides whether you need a credit line at all.
• Ask Lumi the main reason for the decline or the lower limit. The answer helps you avoid repeating it.
• Get your own credit report. Free, and it shows you what lenders see. Moneysmart explains how.
• Hold off on more online applications until you know the cause.
• If you own property, say so. It opens a different door.

The one-off alternative

Lots of people apply for a line of credit when what they really need is a single, known amount: new chairs and basins for the salon, a quarterly BAS, a stock order before a busy season. A credit line is a fine tool for recurring dips, but for a single hit, a short loan is often simpler.

That’s what Company Cash does. We lend $20,000 to $50,000, once, against residential or commercial property: up to 80% of residential value or 70% of commercial. There’s no valuation. We don’t need bank statements, financials or tax returns, so the end-of-month dip doesn’t count against you. Bad credit and ATO debt are considered. Up to three months of interest can be prepaid, then repayments are weekly, and once the cost is covered you’re out. Our prepaid interest and weekly repayments page shows how that plays out.

Example: the salon refit

A hair salon company in Sydney’s inner west wants $30,000 to refit two stations and buy stock ahead of the Christmas rush. The director applies for a line of credit, but the account dips into overdraft at month-end and there’s an old default on her file. The limit offered is $8,000, which doesn’t cover the job.

She owns a unit in Marrickville with a decent amount of equity. A $30,000 loan against it covers the whole refit, with prepaid interest carrying the first weeks and the busy season helping repay it. The overdraft dip doesn’t come into it. This is an illustration only.

When a line of credit is still the answer

If the squeeze happens every month, a revolving line may genuinely be the right product, and a modest limit you can grow over time is not a bad start. Our explainer on business lines of credit covers how lenders set limits. But if you need the full amount for one job, and you have equity, don’t settle for a fraction of it.

Ask us instead

If Lumi’s answer didn’t get the job done, tell us what you need. The form takes about a minute, and enquiring involves no credit check, so nothing new lands on your file. You deal directly with us as the lender, not a broker sending your details far and wide. A real person reads it and calls you. Give us honest numbers on the property and what’s owing so we can match you properly first go. See if you qualify →