Denied for an SBA Loan by Your Bank? Don’t Worry—Private Lenders Could Be the Solution You Need

4 min read

Turned Down by Your Bank for an SBA Loan? Here’s Why Private Lenders Could Be Your Perfect Match

As a small business owner, hearing "no" from a bank on your SBA loan application can be disheartening. You’re not alone—many entrepreneurs have faced this frustrating roadblock, even when they’ve been technically approved for an SBA loan. But here's the good news: being denied by a bank doesn’t mean your SBA loan journey is over. In fact, private SBA lenders may be the perfect solution you didn’t even know existed.

In this blog, we’re breaking down the key differences between traditional banks and private SBA lenders—and why private lending might just be your business's best option. Why Businesses Love SBA Loans

SBA loans are a popular choice among small business owners for a variety of reasons:

1. Favorable Terms: SBA loans typically offer lower interest rates and longer repayment terms compared to other loan options. This makes them highly attractive for businesses that want to manage cash flow effectively and reduce their monthly payments.

2. Lower Down Payments: For many SBA loans, the required down payment is significantly lower than for traditional bank loans, which allows businesses to preserve more of their working capital.

3. SBA Guarantee: The U.S. Small Business Administration (SBA) guarantees up to 85% of loans for smaller amounts and 75% for loans over $150,000. This reduces the risk for lenders and makes it easier for small businesses to qualify.

4. Flexible Use of Funds: One of the best things about SBA loans is their flexibility. They can be used for a wide range of purposes, such as:

Purchasing equipment or machinery
Refinancing existing debt
Acquiring commercial real estate
Expanding or renovating facilities
Working capital for daily operations
Buying inventory or supplies
Funding the acquisition of another business

This versatility makes SBA loans a go-to choice for businesses looking for long-term, affordable financing solutions.

Why Banks Turn Down SBA Loans

When applying for an SBA loan through a traditional bank, you’re entering a world of strict regulations, slow-moving processes, and risk-averse policies. Even if you meet SBA requirements, banks can still decline your loan for a variety of reasons, including:

1. Banks Are Cautious by Nature: Even with the SBA guaranteeing a portion of your loan, banks often shy away from what they consider risky businesses.

2. Rigid Underwriting Guidelines: Banks have a stringent set of requirements, from credit scores to cash flow and collateral. If your business doesn't check every box, you're likely to be turned away.

3. Industry-Specific Hesitations: Some industries, like construction, restaurants, or retail, are often labeled “high-risk” by banks. Even with SBA backing, these industries face more rejections than others.

4. Slow and Tedious Approval Process: Waiting months for a decision isn’t ideal when your business needs capital now. For many small businesses, this lag can be a deal-breaker.

The truth is, banks have internal policies and risk thresholds that prevent them from being as flexible as many businesses need. While it’s frustrating to be denied or stuck in underwriting limbo, it’s not the end of the road. There’s another option—one that’s faster, more flexible, and often much more in tune with your business’s unique needs: private SBA lenders.

Why Private SBA Lenders Are the Better Option

Private SBA lenders offer a fresh alternative, with a process that’s smoother, faster, and more accommodating. If your bank couldn’t get you across the finish line, a private SBA lender just might.

1. Faster Approvals and Funding: While banks often take several weeks or even months to process SBA loans, private lenders generally offer a more streamlined process. Depending on the complexity of your business and loan, private lenders may be able to approve and fund loans in a shorter time frame, often reducing the wait compared to traditional banks. However, timelines can vary depending on the specifics of the deal.

2. Flexible Underwriting Tailored to You: Unlike banks, private lenders understand that not every business fits the same mold. They’re more willing to work with you if your credit score isn’t perfect or if your industry is considered risky.

3. Customized Loan Solutions: Private SBA lenders often specialize in certain industries, meaning they understand the unique challenges your business faces and can tailor loan solutions to suit your goals.

4. More Willing to Work with High-Risk Industries: Whether you're in construction, hospitality, or retail, private lenders are more familiar with these industries and less likely to reject your application simply because of your sector.

5. No Strict Credit or Collateral Requirements: Private lenders take a holistic view of your business, looking beyond credit scores and collateral to focus on your overall business potential.

Should You Consider Private SBA Lenders?

If your bank has turned you down or you’ve been stuck in an endless underwriting process, private SBA lenders are a breath of fresh air. These lenders know how to navigate SBA loan programs efficiently, helping you secure the financing your business deserves without the headache of bank delays.

Key Takeaways:

Private SBA lenders offer quicker approvals and funding compared to traditional banks.
Their flexible underwriting accommodates businesses that don’t fit into rigid bank criteria.
Private lenders specialize in working with high-risk industries and unique business models.
If your bank couldn’t underwrite your SBA loan, private lenders may be able to get it done quickly and efficiently.

Final Thoughts

Being rejected by a bank for an SBA loan doesn’t have to stall your business’s growth. Private SBA lenders offer faster, more flexible options to get the capital you need—whether it's for expansion, working capital, or a big purchase. Don’t let the bank’s “no” be the final word.

Need Help with Other Funding Solutions?

At Njord Capital Group, our priority is understanding your unique situation and recommending the best solutions for your business. Whether you’re exploring short-term, long-term, or other financing options to improve cash flow, our goal is to provide real, practical solutions to get you back on track. If you’d like to explore how these strategies can fit into your financial plan, don’t hesitate to reach out at info@njordcapitalgroup.com or visit us at www.njordcapitalgroup.com to explore our other financing products.