Jun 18, 2024
Travis Palmer

SBA Loan Declined: What to Do Next

Receiving a decline for an SBA loan can be disheartening, but it's not the end of your journey to secure funding for your business. This guide explores what to do next if your SBA loan is declined, alternative financing options, and strategies to improve your chances of future approval.

1. Understand the Reason for Decline

Request Feedback

  • Contact Lender: Reach out to the lender to understand the specific reasons why your SBA loan application was declined.
  • Common Reasons: Poor credit score, insufficient collateral, inadequate cash flow, or incomplete documentation.

Review Application

  • Double-Check: Review your application thoroughly to identify any areas of weakness or missing information.
  • Documentation: Ensure all required documents were submitted correctly.

2. Address the Issues

Improve Credit Score

  • Check Credit Reports: Obtain your credit reports from the major credit bureaus and review them for errors.
  • Pay Down Debt: Reduce outstanding debts to improve your credit utilization ratio.
  • Timely Payments: Make all payments on time to build a positive payment history.

Increase Cash Flow

  • Boost Revenue: Implement strategies to increase sales and revenue.
  • Expense Management: Cut unnecessary expenses to improve net income.
  • Invoice Management: Ensure timely collection of receivables.

Strengthen Collateral

  • Asset Valuation: Reassess your assets to see if you can offer additional collateral.
  • Acquire Assets: Consider acquiring assets that can be used as collateral.

Complete Documentation

  • Ensure Accuracy: Double-check all forms and documentation for accuracy.
  • Professional Assistance: Consider hiring a business consultant or accountant to help with the application process.

3. Explore Alternative Financing Options


  • Overview: Microloans are smaller loans typically offered by non-profit organizations and community lenders.
  • Loan Amounts: Up to $50,000.
  • Examples: Accion, Kiva, Grameen America.

Online Lenders

  • Overview: Online lenders offer a variety of loan products with more flexible requirements.
  • Loan Amounts: Up to $500,000.
  • Interest Rates: Higher than traditional banks.
  • Examples: OnDeck, Fundbox, BlueVine.

Business Credit Cards

  • Overview: Business credit cards can provide a revolving line of credit for business expenses.
  • Interest Rates: Varies, often 13% to 25%.
  • Pros: Quick access to funds, potential rewards and cash back.
  • Cons: High-interest rates if not paid off monthly.

Equipment Financing

  • Overview: Loans specifically for purchasing business equipment, with the equipment serving as collateral.
  • Loan Amounts: Varies based on the equipment's value.
  • Interest Rates: 8% to 30%.

Invoice Financing

  • Overview: Advances based on your outstanding invoices, providing immediate cash flow.
  • Loan Amounts: Up to 90% of the invoice value.
  • Interest Rates: Higher rates, often 10% to 60% APR.

Merchant Cash Advances

  • Overview: Advances based on future credit card sales, repaid through a percentage of daily sales.
  • Loan Amounts: Up to $250,000.
  • Interest Rates: Can be very high, often 20% to 250% APR.


  • Overview: Raising small amounts of money from a large number of people, typically via online platforms.
  • Platforms: Kickstarter, Indiegogo, GoFundMe.

Grants and Competitions

  • Overview: Various grants and business competitions offer funding without the need to repay.
  • Examples: FedEx Small Business Grant Contest, National Association for the Self-Employed (NASE) Growth Grants.

4. Strengthen Your Next Application

Detailed Business Plan

  • Executive Summary: Provide a clear and concise overview of your business.
  • Market Analysis: Demonstrate knowledge of your industry and market conditions.
  • Financial Projections: Include detailed financial statements and forecasts.

Seek Professional Advice

  • Business Consultants: Hire a business consultant to help refine your business plan and application.
  • Accountants: Work with an accountant to ensure accurate financial documentation.

Build Relationships with Lenders

  • Local Banks and Credit Unions: Establish relationships with local financial institutions.
  • Networking: Attend business networking events to connect with potential lenders and investors.

5. Consider Non-Debt Financing

Equity Financing

  • Angel Investors: Seek out angel investors who provide capital in exchange for equity.
  • Venture Capital: Approach venture capital firms for larger investments.

Strategic Partnerships

  • Collaborations: Form partnerships with other businesses to share resources and reduce costs.
  • Joint Ventures: Enter into joint ventures to access new markets and funding opportunities.


Receiving a decline for an SBA loan can be a setback, but it's important to understand the reasons and take steps to improve your chances for future approval. By addressing the issues, exploring alternative financing options, and strengthening your next application, you can secure the funding needed to grow your business.

Ready to explore your funding options and secure the right financial solutions for your business? Get offers today! Fill out an application with Approvd and discover the best funding solutions for your business. For more business, credit, and financial insights, visit our Approvd blog page.

About the Author

With over 20 years of experience in the business loan marketplace at Approvd, our expert has helped countless small business owners navigate the complexities of securing the right funding. Passionate about empowering entrepreneurs, our expert combines industry knowledge with a deep understanding of the challenges faced by small businesses today.

Man and woman small business owners

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