SBA Loan Online

Has your SBA loan application been rejected? Read the article below on steps to take when this happens, as well as what to do to try again.

Your loan request has been REJECTED! What now?

If you've had a loan application turned down, take heart. Many successful businesses have had loan applications rejected during their start-up phase. When this happens, learn from it and use the information that you gather for future dealings with banks. Try and find out the following:

When a lender says no, try to do the following:

1. Thank the lender for their time considering your request.

Never act resentful. It's most likely that the lender considered the application in a highly professional, objective manner. Loan rejections should not be taken personally. Remain professional, and you will have the best chance of impressing the lender for future applications.

2. Ask what specific information or lack of information counted against you.

Most banks will follow federal regulations and prepare a detailed report for the loan rejection. Talk with the lender about the points mentioned, verify that they are accurate and ask how you can address each to improve future applications. Again, never argue with the lender about any of the points. Remain calm and reasonable, and learn from them.

3. Ask the lender for specific recommendations that they can make to improve your future chances.

You could ask, for instance, "Can you give me any personal advice on how to improve my loan application?" Many times, the answer will refer to aspects of your business operations that need improving for this, or other similar, bank to be able to approve your loan. Again, this is not a personal statement against you or your business.

4. Understand that, generally speaking, business loans are turned down for four main reasons:

Discuss theses points with your lender to see how you might be able to work out a loan even with a low credit score and before cash flow becomes steady. When it comes to writing your loan application and business plan, ask what in particular was lacking.

5. Ask the bank if they can re-work your application so that it fits with their lending criteria.

The resulting re-worked loan agreement may insist on changes to your operations or require adding significant personal collateral, such as taking out a mortgage on your home. But at least you'll see what you need in order to structure a favorable loan application.

Finally, if it seems that you and the bank will not be able to work out an agreement--and if it's likely that your cash flow or collateral probably won't meet criteria for some time--ask the bank for suggestions on finding a lender that can work within the financial parameters of your company. Always seek out reputable lenders with established track records in the community.