Key Takeaways
- SBA loan denial could be chalked up to poor credit, industry, or even business age
- You can reapply for an SBA 7(a) Loan through NEWITY after 90 days
- Organize your finances to track your own eligibility and prepare for the next time you apply
- Improve your business’s credit by using a credit building card like NAV Prime
- Assess and improve your cash flow by paying down debt or increasing revenues
Does getting denied a loan hurt your credit?
Why was my SBA loan application denied?
Your SBA loan application could be denied for several reasons:
1. Poor Credit
2. Industry Risk
3. Business Age
Can I Reapply for an SBA loan after being denied?
Here are 4 steps you can take to start making strides toward that loan approval:
1. Get organized
When it comes to securing a small business loan, you’ll need to prove your trustworthiness with objective metrics. Sort through both your business and personal finances and collect all relevant documents in a folder that you can easily reference when necessary.
This will not only help you in your application process the next time around, but it also helps you keep track of your financial standing as you work toward loan qualification.
Keep these on file and use them as reference points to grow from:
- Tax documents from the last 2 years, both personal and business (if applicable)
- Detailed business finances (bank statements, credit card statements, existing loan statements)
- Profit and Loss Statement
2. Improve your business credit score
It’s likely your business credit history is much shorter than your personal credit history. The longer you build your business credit history, the better your credit will be.
Ensure your business has an established DUNS number, which is a 9-digit number from Dun & Bradstreet used to identify your business’s credit portfolio.
Consider opening a credit card. NAV Prime is a great option for a credit-building business credit card. This will allow you to immediately cover your most pertinent business expenses and will also help you build your credit portfolio when you make consistent payments on time.
3. Realistically assess debt-to-income ratio
At the end of the day, your phenomenal credit and highly successful business will be overshadowed by any large amounts of debt you already have when applying for another loan. Lenders want to see that you’re making enough money to cover what you owe and take on further debt.
Additionally, take your debt-to-income ratio into account when deciding how much you want to request in your SBA 7(a) loan. Applying for a reasonable amount will not only increase your chances of receiving an approval but will also keep you out of more debt than you’re equipped to handle.
Take into consideration how you could be increasing your cash flow. Small factors like revenue management tactics and invoice processes can greatly impact the free cash you have on hand at any given time.
4. Stay consistent & patient
In an age where the world is a click away, we’ve grown reliant on instant gratification. The true and enduring success that will set you apart from your competition is forged by playing the long game. Sometimes, your best bet is to commit to being consistently organized and financially smart for several months or longer in order to build a strong financial standing.
