Why Good Businesses Still Get Turned Down for Loans: A Banker’s View on the Art of Raising Debt

Capital has rarely been easier to find in India. Banks, NBFCs, housing finance companies and private credit funds are all keen to lend. Yet across the country, sound businesses with credible promoters still hear the same polite line from lenders: “We will revert.”

Abhishek Gupta, Founding Partner at Bluford Capital, has spent over two decades watching this play out from both sides of the table. His view is that the problem is rarely the business. It is the way the case is presented.

“Most promoters think raising debt is about finding the right lender,” he says. “It is closer to becoming the right borrower.”

The Lender’s Question Is Different from the Promoter’s

A promoter looks at a loan and sees growth, a new plant, a larger order book or a second location. A lender looks at the same request and asks one thing: how will this be repaid, and what happens if it is not?

“A lender is not funding your ambition,” Abhishek explains. “They are underwriting your ability to repay. Once a promoter starts presenting the business through that lens, the whole conversation changes.”

This gap in perspective explains why two businesses with similar numbers can get very different responses. One arrives with a structured case. The other arrives with a stack of documents and a hope.

What Tends to Make a Debt Proposal Work

Having reviewed and structured many funding requests, Abhishek points to a few patterns that separate proposals that move from those that stall:

A specific purpose. “We need working capital” is a request. “We need ₹X crore to bridge a receivables cycle of Y days, repaid from Z” is a case. The more precisely the use of funds is defined, the less a lender has to guess.

Cash flow over collateral. Security provides comfort, but repayment capacity provides confidence. Lenders are far more at ease with a business whose cash flows tell a consistent story than with one that leans only on assets.

Structure that fits the business. The same requirement can be met through a term loan, a structured facility, a loan against property or supply chain finance. Each carries different costs, covenants and obligations. “The wrong structure can strain a healthy business,” he notes. “The right one quietly supports it.”

Honesty about weak spots. Every business has a soft area, whether a concentrated customer base, a lumpy quarter or a past delay. “Lenders always find it,” he says. “It is far better that they hear it from you, along with your explanation.”

Persuasion Is Part of the Process

Abhishek’s own path into finance was somewhat unconventional. He began in front-facing roles, meeting clients and winning mandates, and picked up the execution side afterwards. Most bankers in India learn it the other way round.

He sees that as a useful lens for debt raising. “Execution matters, and I would never understate it. But a good deal also needs someone who can understand what the other side is anxious about and address it calmly. A credit committee is made of people, and people respond to clarity and preparation.”

It is a theme he returns to in his book, The Deal Room, which looks at how transactions come together in practice: how mandates are won, how investors and lenders actually think, and why deals that look flawless on paper sometimes fall apart in the final stretch. “The textbook version of finance is tidy,” he says. “The real version is about preparation, trust and timing.”

Start Early, Prepare Quietly

If there is one practical lesson Abhishek would pass on to promoters, it is about timing. Businesses often begin preparing for a loan only when the need becomes urgent, and urgency weakens any negotiating position.

His suggestions are simple:

• Begin preparing at least six months before the funds are needed.
• Keep financials clean, current and easy to explain.
• Understand the business as a credit officer would, including its risks.
• Choose the structure that suits your cash flows, not the one that is quickest to obtain.
• Speak to someone who has seen both sides of a funding conversation before approaching lenders.

“Capital is not scarce,” Abhishek says. “Well-prepared borrowers are. When you present your business the way a lender needs to see it, funding stops being a favour and becomes a decision they are comfortable making.”

Abhishek Gupta is the Founding Partner of Bluford Capital, a Hyderabad-based boutique investment banking and transaction advisory firm, and the author of The Deal Room.