What Can I Do If My Business Loan Is Not Approved? (2024)

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What Can I Do If My Business Loan Is Not Approved? (2024)

FAQs

Why can't I get approved for a business loan? ›

Common reasons for loan rejection are not having a long track record in business, deteriorating business conditions in the industry where you operate and poor cash flow. If the lender is concerned about something you can control, correcting the situation and then reapplying may be the best course of action.

What disqualifies you from getting a business loan? ›

Reasons you may be disqualified from a small business loan include a low credit score, poor cash flow, no collateral, significant debt, a bad business plan or having a business in a risky industry.

What happens if a business loan fails? ›

There are many negative consequences. For one, your business and potentially personal credit scores will drop significantly. Your lender could also demand full repayment of the loan immediately and apply a penalty interest rate. The lender will then pursue you for repayment in one way or another.

Do you get a grant if you get denied for SBA loan? ›

FEMA Grants are made available for qualified individuals for pre- and post-emergency or disaster-related projects. If you have been denied an SBA disaster loan, FEMA actually encourages you to apply for a grant. In fact, your appeal has to be formally denied to be eligible for any FEMA grants.

What is the minimum credit score for business loan? ›

With a fair credit score of 580-669, you'll meet most minimum credit score requirements for a cash advance, invoice factoring, or equipment financing.

How can I get a loan when I keep getting denied? ›

Paying down debts, increasing your income, applying with a co-signer or co-borrower and looking for lenders that specialize in loans within your credit band could increase your approval odds.

How to get out of a bad business loan? ›

How can I get out of business loan debt?
  1. Reduce expenses and/or increase income so you can put more money toward your debt payments.
  2. Explore refinancing your debts and/or business debt consolidation.
  3. Consider negotiating debt/debt settlement.
  4. Investigate a sale of business assets.
Jan 17, 2024

What if I lost my business and can't pay back my SBA loan? ›

The SBA Will Initiate Collections

If liquidating your business and personal assets isn't enough, your lender will file a claim with the SBA. The SBA guarantees all partner lenders 50% to 80% of the loan, even if you don't pay. In case of default, the SBA will pay up to 85% of the loan amount.

What happens if an LLC can't pay back a loan? ›

If you fail to pay a business loan, a lender will typically try to work with you, setting up a plan to pay off the loan. If this doesn't work, you'll go into default. If you signed a personal guarantee or provide collateral, your lender has the right to seize assets. Your credit score will also drop.

What will disqualify you from an SBA loan? ›

Belonging to an ineligible industry. Some industries are ineligible for SBA loans; consumer and marketing cooperatives, gambling, multi-sales distribution, lending firms, non-profits, pyramid schemes, and real estate investment firms, among others, won't be considered for these government-backed loans.

Can you apply again if SBA denied? ›

SBA guidelines state that a borrower has to wait 90 days after receiving a denial notice before they can reapply for an SBA loan. If you need funding more quickly than 90 days, finding a new lender may be the best idea for you.

How do I get my SBA loan approved? ›

In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding.

Why is it so difficult to get a business loan? ›

While getting a business loan can be difficult since most require strong personal and business credit scores, reliable cash flow and at least two years in business, there are alternatives available to obtain the cash you need.

What makes you eligible for a small business loan? ›

In general, eligibility is based on what a business does to receive its income, the character of its ownership, and where the business operates. Normally, businesses must meet SBA size standards, be able to repay, and have a sound business purpose. Even those with bad credit may qualify for startup funding.

Why would a business not be SBA eligible? ›

First and foremost, your business must be for-profit and operate within the United States or its territories. Non-profit organizations are not eligible for SBA loans. Additionally, you must have exhausted all other financing options, including personal assets, before turning to an SBA loan.

Why am I not getting approved for a business bank account? ›

The primary reasons businesses are denied a new business bank account include the business being too new, documentation being missing or unverifiable, or credit issues on either business or personal credit reports.

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