Top Reasons Why Your Illinois SBA EIDL Loan was Denied

Why your Illinois SBA EIDL Loan Was Denied

Illinois SBA has approved over 149,851 EIDLs worth $12,449,798,374 so far, and is still evaluating reconsideration requests for Illinois loan applications that have been denied.

Your EIDL loan application may have been rejected by the SBA in Illinois, and there could be various reasons. 

Here are some of the top reasons that result in denial of your Illinois SBA EIDL loan application. You can go through them, avoid making those mistakes and get your Illinois SBA EIDL loan approved.

Illinois SBA EIDL Loan Eligibility

If you have suffered a substantial economic injury and are one of the following types of businesses located in an Illinois declared disaster area, you may be eligible for an Illinois SBA EIDL:

  • Illinois small business
  • Illinois small agricultural cooperative
  • Illinois most private nonprofit organizations

Illinois SBA EIDL Loan requires:

  • Substantial economic injury means the Illinois business cannot meet its obligations and pay its ordinary and necessary operating expenses.
  • EIDL provides the necessary working capital to help small Illinois businesses impacted by a disaster survive until normal operations resume.  
  • EIDL assistance is available only to Illinois small businesses when SBA determines they cannot obtain credit elsewhere.

SBA can provide up to $2 million* to help meet financial obligations and operating expenses that could have been met had the disaster not occurred. The loan amount will be based on your actual economic injury and your company’s financial needs, regardless of whether the business suffered any property damage.

An Illinois business may qualify for, both, an EIDL and a physical disaster loan.

The maximum combined loan amount is $2 million. In addition, a separate Illinois SBA Disaster Assistance program known as business physical disaster loans covers property damage.

Reasons Why Your Illinois SBA EIDL Loan is Denied

Illinois Economic Injury Not Sustained

You can’t prove that your Illinois business was directly affected by a disaster. This is one of the main reasons that people are rejected for Illinois SBA EIDL loans. Make sure to include an explanation with your application that proves how you were affected by a natural disaster, but also show your future plans for your Illinois business so they can see what you have to offer.

Incomplete Illinois EIDL Application

Make sure to proofread your Illinois application before submitting it. Any errors on paper will lead them to believe that you didn’t take the time to review everything beforehand. Also, remember to include all necessary documents such as bank statements, wrong name, wrong address, leases, and tax forms in order for them to process your Illinois application successfully.

Failure to Respond to Illinois SBA Requests

If Illinois applicants do not respond to emails asking for additional information or to sign loan closing documents, the application will typically expire after 60 days.

24 Months of Margin Reached

To shift all Illinois EIDL payments to 2022, SBA will extend the first payment due date for disaster loans made in 2020 to 24-months from the date of the note and to 18-months from the date of the note for all loans made in the calendar year 2021. Thus, you might get a denial if you miss the 24-month margin.

Illinois SBA Business Size Standards Not Met

Make sure to read over the information on what qualifies as an Illinois small business before applying for Illinois SBA loans. It’s possible that your Illinois company doesn’t meet the minimum requirements and therefore shouldn’t be applying in the first place.

Insufficient Credit History

Having a lack of Illinois credit history can be difficult for lenders, but having other collateral such as real estate or equipment will work in your favor.

Low Credit Score

If you have a very low credit score (ideally below 570), then it is very hard for you to get the Illinois SBA loan application approved. Make sure that you have maintained your credit score well enough.

Unverifiable Information

Unverified Illinois EIDL applications are denied due to identity proofing that could not be validated. The Illinois SBA may have denied your application simply because it was unable to verify some of your information. In this case, it may be easy for you to provide the information requested. Do this at least seven days before your application is completely declined.

Income That’s Too Low or Unstable

Illinois lenders will want to see that you’re able to repay the loan on your own first before applying with them. Make sure that you’re bringing home enough each month and show stability by paying taxes on time and updating records as needed.

Lack of Capital to Repay the Loan

If you lack the resources to repay the Illinois loan, it will be difficult to approve. Make sure that you’ve taken the time to save up and have cash readily available.

No Collateral to Offer

If you don’t own any assets or have a permanent location, it may be hard for lenders to feel comfortable loaning you money. Make sure that you read over the application and receive an Illinois SBA loan with a co-borrower who does have collateral.

Risky Industry

Illinois SBA loans aren’t for everyone and can help those with a stable business in a safe industry. Banks want to know that you’ll be paying them back so it’s harder for people who work in more unstable industries such as entertainment or mining.

Substantive Character Issues

The Illinois SBA doesn’t want to get involved with people who have a history of bankruptcy, lawsuits, or hired liens. Make sure that you read over your application again and avoid issues by only applying for one loan at a time.

An Active Tax Lien or Judgment Against the Business

If you have a history of being sued, try to avoid applying with the Illinois SBA. There are other lenders that will be more willing to work with you depending on factors such as location and collateral.

What to Do If Your Illinois SBA EIDL Loan is Denied?

The applicant has up to 6 months from the date of the SBA Decline Letter to formally request an Illinois loan reconsideration, even after the application deadline of 12/31/21.

If you have been rejected due to any of the above-given issues, then you should get the correct documents and apply for Illinois SBA EIDL loan reconsideration. If you put all the things in the correct place then you will surely get your Illinois SBA loan approved.

For most Illinois EIDL reconsideration, most cases take 30-45 days. Still, they can take up to 60 days depending on federal guidelines and if changes need to be made after reviewing more information about the case.

An alternative to the SBA EIDL loan in Illinois is the Employee Retention Tax Credit program for IL.

Conclusion and Summary if Your SBA EIDL Loan was Denied in Illinois

If your Illinois SBA loan was denied, the very first option is to file an appeal and request reconsideration for your Illinois EIDL loan. You can also contact an SBA Illinois Loan Specialist to assist you through the whole process, however, it can sometimes be difficult to get personal attention depending on how busy their office is.

If you have any further questions, leave a comment below and we’ll do our best to assist your Illinois business.

Does Your Illinois Business Need an Increase or Loan Modification to Your Existing SBA EIDL Loan?

Did you already receive an Illinois SBA EIDL loan for your Illinois business?

We can assist your business in requesting additional SBA EIDL loan funds through the increase request and loan modification process in Illinois.

Schedule Your Free Disaster Loan Consultation to see if we may be able to help your business with the SBA Increase Request Process in Illinois.

Was Your Illinois SBA EIDL Loan Denied?

Has your Illinois SBA EIDL loan been denied for your IL business?

We can assist you in filing for an SBA EIDL loan reconsideration appeal for your business in Illinois.

Schedule Your Free Disaster Loan Consultation to see if we may be able to help your business with the SBA Loan Reconsideration Process in Illinois.

Cover Image Credit: 123RF.com / Deagreez. / Disaster Loan Advisors.

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