Here are three alternative ways to phrase that, keeping empathy and clarity in mind:

After carefully reviewing your request, we regret to inform you that we are unable to approve it at this time. We understand this news may be disappointing.

Thank you for submitting your request. We appreciate you sharing it with us. While we fully understand the intention behind it, we are not in a position to move forward with it currently.

We've given considerable thought to your request and truly appreciate you bringing it to our attention. Unfortunately, we must decline it at this juncture. We hope you can understand our current limitations.