What to Do If Your SBA Loan Application Is Declined
At Small Business Funding, we often work with business owners who have been turned down. We know why denials happen, what lenders are really looking for, and how to rebuild your application so you have a stronger chance next time.
Step 1: Review Your Decline Letter
When your SBA loan is declined, the lender usually issues a letter explaining the reasons. This letter may list issues such as low credit scores, weak cash flow, missing documents, or applying for the wrong SBA program.
TIP: We go through your decline letter with you, translate the lender’s feedback, and show you exactly what needs to be fixed.
Step 2: Appeal or Reapply?
Most SBA loan declines come from lenders, not the SBA. That means you cannot usually appeal directly to the SBA. The best path is often to fix the issues and reapply with a stronger file.
The exception is SBA Disaster Loans (such as EIDL). For these loans, you may request reconsideration within six months of decline, and if declined again, you may appeal within 30 days.
TIP: If your decline was for a standard SBA loan, we can help you prepare a new application and connect you to lenders more open to your business profile.
Step 3: Fix the Issues Before You Reapply
To improve your chances the second time around, you may need to:
- Strengthen your credit if scores were too low
- Update financial statements or cash flow projections
- Provide collateral if the lender requires it
- Complete missing SBA forms or business documentation
TIP: We focus on the fixes that matter most. Instead of overloading your file, we highlight the changes that actually improve your approval odds.
Step 4: Know When You Can Reapply
Many lenders require a 90-day wait period before you can reapply. However, if we believe the decline was due to a specific policy or interpretation by the bank, then we may advise you to apply with a different SBA lending partner of ours. While all banks must follow SBA guidelines, they each may interpret them slightly differently. This also gives time to correct problems and demonstrate changes. Appeals for disaster loans follow their own timelines, but for most SBA loans, reapplying is faster than pursuing an appeal.
TIP: We use that waiting period to prepare your file so the next application is stronger and ready to move.
Step 5: Consider Switching SBA Programs
If you were declined for one SBA program, you may still qualify for another. For example, a business turned down for a large 7(a) loan may be eligible for an SBA Microloan or Express Loan with fewer requirements.
TIP: We know which SBA programs are most accessible based on your credit, cash flow, and funding needs.
Step 6: Look at Alternative Funding
If you cannot wait to reapply or if your file is not SBA-ready, you may want to consider other financing. Options include revenue-based funding, equipment financing, or short-term working capital or bridge loans. These may carry higher costs but can keep your business moving while you prepare for an SBA loan later.
TIP: We can walk you through both SBA and non-SBA funding paths so you do not stall your business plans.
Step 7: Reapply With Expert Guidance
When you are ready to reapply, your application should target the right SBA program and lender. A clear, well-organized file shows that you addressed past issues and are prepared for approval.
TIP: We repackage your application, highlight your strengths, and present it to the lenders most likely to approve your loan.
Bottom Line
Being declined for an SBA loan is frustrating, but it is not the end. Denials are common, and most can be overcome by fixing issues, choosing the right program, or exploring other funding while you prepare.
If you have been denied, don’t go through the process alone. Small Business Funding has helped many business owners turn rejections into approvals—and we can help you do the same.
