The Most Common ‘Deal Killers’ Lenders Don’t Tell You About
.svg)
- SBA lenders often hide the real reasons behind loan declines, leaving business owners in the dark about fixable issues.
- Bank statements that don't align with tax returns create major red flags for lenders who prioritize consistent financial reporting.
- Personal credit utilization matters more than your actual credit score when applying for SBA loans.
- Even profitable businesses can be declined if revenue is trending downward, as lenders focus on trajectory over current profitability.
- Most SBA loan declines result from preventable issues in preparation rather than fundamental business problems.
When SBA lenders decline a loan, they almost never give the full story. They'll issue decline reasons like; “didn’t meet credit requirements” or “insufficient cash flow,” but behind the scenes, the real reasons are far more specific and often preventable by the business owner.
At FastWaySBA, we see loan submissions from applicants who should have been approved, but were eventually declined because of avoidable mistakes in pre-underwriting. These “deal killers” happen when underwriters unearth unqualifiable facts.
Below are the biggest deal killers lenders won’t tell you about - and how to fix them before you apply. It’s easier to fix these issues BEFORE applying.
Bank Statements That Don’t Match Your Tax Returns
Lenders analyze your business bank statements to validate your revenue. If your statements show deposits significantly lower than what you reported on your tax return, it raises questions about:
- Underreported revenue
- Cash-based income
- Inconsistency in financial reporting
- Poor bookkeeping or improper categorization
- Even if it’s innocent, it’s a major red flag and often causes a silent decline.
How to fix:
Reconcile your books monthly.
Ensure revenue is deposited into one primary operating account.
Clean up bookkeeping before applying.
High Utilization on Personal Credit Cards
Most lenders don’t tell you this:
Your personal credit utilization impacts SBA approval more than your credit score.
You can have a 730+ score but get declined because you’re using 60% of your revolving credit.
Why lenders care:
High utilization = financial stress.
How to fix: Bring utilization below 30% - ideally under 15% - before your credit is pulled.
Declining Revenue (Even If Still Profitable)
A profitable business can and often do get declined because revenue is trending downward.
Lenders see declining revenue as weakening demand, unstable cash flow, or a business losing market position.
What matters most:
- Not profit - trajectory.
- How to fix:
- Show month-over-month recovery.
- Provide explanations (seasonality, inventory delays, one-time events).
- Prepare updated YTD financials demonstrating stabilization.
Current Legal Proceedings
Lenders decline deals if the owner (applicant) or business is currently involved in civil or criminal litigation. SBA lenders will not be able to fund until the legal proceedings are completed, this is due to unknown financial burdens that may impact the business’ ability to repay the loan.
Examples:
Most Common are divorce proceedings (doesn’t matter if you are the plaintiff or defendant).
Lawsuits from vendors or customers.
How to fix: Only fully apply for an SBA loan if you are completely out of all legal litigation.
Co-Borrower Red Flags (Silent Killer)
A partner with poor credit, past tax issues, or a recent bankruptcy can sink the deal - and many lenders won’t tell you exactly why.
If they own 20%+ of the business, they must qualify too.
How to fix:
Evaluate all partners’ credit before applying.
Restructure ownership if necessary (you will need to wait 6 months to apply after changing ownership.
Remove inactive or problematic partners early.
Poorly Prepared Financials (The #1 Reason Files Fail in Underwriting)
The SBA 7(a) program is cash-flow based. If your financial package is sloppy, inconsistent, or incomplete, the lender won’t fix it for you - they’ll decline it.
Common issues:
Missing items that were not reported in debt schedule
Inaccurate Income Statement (P&L)
Commingled personal/business expenses
Old financials
Issues with past filed taxes or past state/federal tax liabilities
FastWaySBA sees more deals die here than anywhere else.
How to fix: Submit clean, organized, lender - ready financials that tell a clear story of repayment ability.
Most Deal Killers Are Preventable
Most SBA declines are not about the business - they’re about the owner and business profile. Banks rarely explain the true reason because they don’t want liability, conflict, or pushback.
But at FastWaySBA, we see behind the curtain.
The good news?
With the right preparation, almost all of these deal killers can be avoided. A properly packaged file reduces questions, speeds up underwriting, and dramatically increases approval odds.
If you want help analyzing your deal or ensuring your package is lender-ready, check with us first. The underwriters at FastWaySBA can help fix these issues, before the lenders find them.
.png)
