Capital or Loan is essential to running a business...... just like blood for body. Having profit for business is good but having profit as well as strong cashflow is vital. Some business have profit but no cashflow, thus facing serious problem to expand business further or paying suppliers.
Many SME complaints not easy to get loan for business expansion or working capital. Anyhow, the main reasons given including:-
1) Credibility - Bank will look at your Credit Report. Have you? Your credit report just like a Character Report, judging your character in term of repayment. Are you a good paymaster or a bad paymaster?
2) Capacity - Bank will want to know can you expand your business with their money.
3) Competency - Bank will want to know how good are you in your business.
4) Commitment - How commit you are? You can't be a RM2 company and asking bank to lend you RM200,000.
5) Communication - Will you able to communicate to the right person and right time? Talk to wrong bank or wrong banker will kill your chance to get a good loan.
There are more reasons banker will reject or reduce loan limit or impose higher interest as part of their Risk Management Policy. Remember, they are just employees to ensure their company make profit.
Unless you are big client for banks, where they offer you loan even when you don't need it, else, if you need bank loan, better talk to the expert, D-I-Y can be sometime very expensive because if you spoil the best chance you have, you might facing serious liquidity problem.