SBA loans, CDFIs and when the bank says no

Send your request in writing and keep a copy. When the answer comes, sort each reason:

• Fix in 90 days: errors on your credit reports, personal bills in the business account, books that are behind, overdrafts.
• Fix in a year or two: two years of returns showing a profit, less debt, more of your own money in the business.

In the Federal Reserve's 2026 Report on Employer Firms, common reasons for being turned down included too much debt already, low credit scores, too little collateral and weak sales. Each of those can improve with time and the Bank-Ready path (B102.4).

Sometimes the no is the right answer for now. If the loan wouldn't pass your own five Borrowing Rules (B102.3), waiting and building cash is the better plan.

For the programs below, the Small Business Administration (SBA) doesn't lend to you directly. Approved lenders make 7(a) loans with an SBA guarantee, and nonprofit community lenders make microloans with SBA funding.

Under current SBA rules, as lenders summarize them:

• SBA sets no minimum time in business, but start-ups generally need to put in their own money equal to 10% of the project, called an equity injection.
• Owners of 20% or more generally must guarantee the loan personally, and collateral is generally required on loans over $50,000.
• Since March 1, 2026, every owner of a business getting a 7(a) or 504 loan, and any required guarantor, must be a U.S. citizen or national whose main home is in the U.S. or its territories. Lawful permanent residents no longer qualify as owners. SBA microloans have used the same owner rule since April 1, 2026.
• For 7(a) Small loans, SBA has no minimum credit score (the lender reviews credit), cash flow must cover payments at least 1.10 times, and lenders review the last 2 months of business bank statements.

Microloans average about $13,000 and run up to seven years. They can pay for working capital, inventory and equipment, but not existing debts or real estate. Each microlender makes its own credit decisions and sets its own terms, including any collateral or guarantee. SBA rules change, so confirm the current ones with the lender.

CDFIs are Treasury-certified mission lenders: banks, credit unions, loan funds and venture funds. Credit unions and CDFIs are worth a call for business banking as well as loans. Ask each one what it would need to see from you. SBA's free Lender Match tool gives you a list of participating SBA lenders interested in your loan.

SBA does not provide grants for starting or expanding a business. The FTC warns that the government won't contact you out of the blue about a grant, that you should never pay a fee for a grant or a list of grants, and that anyone asking for payment by gift card, wire or crypto is a scammer. The federal list of grants is free at Grants.gov. SBA says it only emails from addresses ending in @sba.gov.

• SBA: Lender Match and microloans.
• Small Business Development Centers: free consulting (find your SBDC).
• SCORE: free mentoring (score.org).
• Treasury: what CDFIs are.
• FTC: government grant scams.