If a local lender tells you your application for a U.S. Small Business Administration-backed loan has been declined, you shouldn't necessarily accept it at face value.
Reportedly, one recent applicant called the SBA office in Pittsburgh to find out why the loan was declined, only to find the lender had never submitting the application to the SBA. That loan apparently is now being processed.
David Miller, SBA assistant director for economic development, says it's a rare occurrence, particularly among the government agency's preferred lenders, with which he says the SBA maintains good relations. But it does happen.
He says it sometimes is little more than a misunderstanding, since local preferred lenders have full authority to prescreen applications and make their own judgment calls before submitting applications to the SBA for approval. Other lenders judge applications by their own eligibility parameters.
However, they're not supposed to "blame" the SBA if the decision to decline is the lenders'.
So here's what you can do, Miller says, to avoid doubt about your loan applications:
- Women, minorities and veteran entrepreneurs can go through a pre-qualification program designed to provide loan analysis before you approach a lender. Two local organizations administer the program: the Regional Development Funding Corp., (412) 471-1030, and the Minority Enterprise Corp., (412) 434-5806.
- If the lender says the SBA formally declined your loan application, by law he must provide a detailed letter of explanation-if requested. Always ask for the letter.
- If you still aren't satisfied with the application process, Miller says, you can call the local SBA office at (412) 395-6565. He says officials will gladly look into the situation for you.