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Small Business Loan - Approval or Denial

Small Business Loan

Applicants receive notice of approval or denial by the lender.

Reasons for Decline

1 – Collateral considered along with other factors were not deemed sufficient to protect the interest of the SBA.
2 – Lack of reasonable assurance that the business can be operated at a rate of profit sufficient to repay the loan from earnings.
3 – Lack of reasonable assurance of ability to repay loan from earnings.
4 – Inadequate working capital after loan.
5 – Not eligible because of size.
6 – Not eligible because of policy reasons.
7 – Unsatisfactory experience on existing loan.


Using residential equity is the lenders way of reminding the borrower of a personal commitment to repaying the loan.

Loan Documents

Read the loan agreement and all covenants carefully. Understand all the restrictions implied and consider how they will impact business. Anticipate problems by maintaining the progress of the lender, attorney, and other professional regularity. Private banks and lenders fund Small Business Loan. The SBA provides a credit enhancement to the lender that encourages the acceptance of more risk.

What SBA Looks for In Approving a Business Loan Request

1 – Good Character
2 – Management Expertise
3 – Sufficient Funds
4 – Feasible Business Plan
5 – Adequate Equity
6 – Sufficient Collateral
7 – Ability to Repay the Loan in a Timely manner

It is a good idea to have a strategy on how to accomplish your goals using fewer dollars. Learn from lender rejection, it will be a useful lesson when managing future loan requests. Some lenders will announce their decision and will not be open to further discussion. Continue to build your proposal with fresh information and new data as it becomes available. Do not let the failure of the loan proposal discourage the effort to get a loan.