Thanks for contacting us! We will review the data you have submitted and will refer you to one or more SBA banks within four business hours. Potential borrowers should expect the process to take 45 days or longer to close on an SBA loan; real estate deals tend to take a little longer since a real estate appraisal and environmental study are required.
Be sure to have the following available at your fingertips and ready to discuss when you call the bank(s):
• Last 3 years financial statements (balance sheets and income statements)
• Current year-to-date financial statements
• The Company’s last 3 years federal tax returns
• Your personal last 3 years federal tax returns
• Discussion of the impact Covid has had on the business
We encourage you to read our article SBA loan eligibility criteria & required docs and know what your Debt Service Coverage Ratio is when you talk to the bank(s) to which we refer you.
Here are the top reasons we see traditional SBA loan applications being denied (in order of importance):
- Personal credit score under 650 from any >20% owner
- Debt Service Coverage Ratio (“DSCR”) below 1.15x. Please see an explanation of DSCR here and know what your DSCRs are for the past two years, this year, and expected DSCR for the next two years. Some banks will want DSCR of 1.15x; others may want a DSCR of 1.4x. We provide a handy DSCR calculator you can use to determine loan payments and DSCR.
- Significant declining revenue trends (year over year or large drops due to coronavirus)
- Less than 2 years in business (exception being acquisition of a business). For acquisitions, buyer must have industry experience.
- Business or personal bankruptcies from any >20% owner during the last five years
- Unfiled tax returns
- Criminal records (other than minor traffic violations)
- Active lawsuits
- Unpaid liens or tax obligations (unless completely paid off with loan proceeds)
- Ineligible business per SBA rules – nonprofit business or a passive income business (e.g., rental apartments)