Accepting the Smaller Line Cost You the Explanation

A founder I work with asked his bank for a $750,000 revolver in March. The offer came back at $300,000. He signed it, called it better than nothing, and moved on to the next thing.

He never learned what capped the number. Worse, the signature is what cost him the answer.

A partial approval is a decline nobody labels

The Federal Reserve's 2026 report on employer firms, built on last year's Small Business Credit Survey, puts 58% of applicants in the denied-or-short bucket. Only 42% got everything they asked for. That partial group is the interesting one, because it's invisible. A founder who requests $750K and takes $300K doesn't describe himself as declined. He says he got the line.

Regulation B draws the line somewhere else. Refusing credit in substantially the amount requested counts as adverse action, which carries an obligation to give reasons. There's a carve-out, though, and it's the one that catches people. If the lender makes a counteroffer and you use or accept it, the transaction stops being adverse action. No obligation. Your signature closes the window.

You have to ask, and almost nobody does

For business credit where prior-year revenue topped $1 million, a lender has to tell you what it decided. Written reasons are different. Those come only if you ask in writing, within 60 days. Below $1M in revenue, the lender has to tell you that right exists. Above it, nobody has to mention it at all.

Which is why most companies between $2M and $20M in revenue never see the reasons. They aren't being withheld. They're just never requested.

Send one paragraph before you sign anything. "Before we accept the $300,000 facility, please provide in writing the specific principal reasons the requested $750,000 was not approved." Then wait for it. A week of delay on a line you were going to sign anyway is a cheap trade.

An itemized readout of how a credit model reads your financials is worth more than the gap between the two numbers.

Aggregate reasons are useless. Yours aren't.

Across the survey, applicants who came up short pointed at lender requirements being too strict (46%), too much existing debt (37%), and low credit scores (30%). Small banks approved 57% of applicants, better than any other lender type.

None of that helps you. It's a distribution, not a diagnosis.

Your notice reads differently. Trailing-twelve coverage of 1.08 against a 1.25 threshold. Receivables concentration over 30% in one customer. Two years of statements that don't reconcile to the tax returns. Each of those has a different lead time. Coverage might move in two quarters if you restructure existing debt. Concentration is a sales problem measured in years. Reconciliation is a bookkeeping project you could start Monday.

You can't sequence work you can't see. And the founder above is now planning next year's capital raise against a $300,000 data point and a guess.

Ask for the reasons while the request is still live. Once you've signed, all you own is the number.