What to do if an SBA loan application is denied

The six-month window

Section 120.193 begins with the clock. An applicant or recipient of a business loan "may request reconsideration of a denied loan or loan modification request within 6 months of denial." After that, the paragraph says, "Six months after denial, a new application is required." The window applies to both new loan denials and requests to modify an existing loan. Enter the denial date in the calculator above and it adds six calendar months, clamping to the last day of the month when needed: a denial on August 31 gives February 28 (or 29) as the date six months later. The regulation says six months without defining how to count; treat the computed date as a planning guide, and build in a margin or confirm the deadline with the office that issued the denial.

Where to send it

The rule is different depending on why you were denied. If the denial was "due to a size determination," the applicant can appeal that determination under part 121 of the chapter, which is SBA's size regulation. For everyone else, the request "must be submitted to the office that denied the original request." The text does not say what form the request must take or what its contents should be; the denial letter and the office that issued it are the guide. If the denial came through a lender before reaching SBA, this section does not address it; it speaks to SBA's denial of a loan or loan modification request.

The standard to win

The text sets a high bar in one sentence: "To prevail, the applicant must demonstrate that it has overcome all legitimate reasons for denial." Two words stand out. "All" means resolving some reasons while leaving another standing is not enough. "Legitimate" means that a reason that is plainly mistaken or unsupported can be challenged as such, while a valid reason has to be cured. A practical way to prepare is to list every reason given in the denial, write what changed or what the record shows for each, and attach evidence. The regulation does not say what counts as sufficient evidence.

A second and final request

If the reconsideration is denied, "a second and final reconsideration may be considered by the Director, Office of Financial Assistance (D/FA) or designee(s), whose decision is final." The word "may" shows that the second review is not guaranteed. The same paragraph adds that the SBA Administrator, "solely within the Administrator's discretion," may choose to review the matter and make the final decision, and states that this discretion "does not create additional rights of appeal on the part of an applicant not otherwise specified in SBA regulations." So the structure has at most two reconsiderations, and the Administrator's optional review is not something an applicant can demand.

Reconsideration versus starting over

Because the six-month window is also the point at which a new application becomes required, there are two roads. If the denial reasons are wrong or can be cured with documents you already have, reconsideration keeps the matter moving. If the business itself needs to change, for example by adding collateral, building a track record or correcting a credit problem, a fresh application after the window may be the cleaner route. The regulation does not rank them. Reading the credit elsewhere test and the ineligible business list helps you see which denial reasons are about the structure of the request and which are about the business.

What the rule does not say

It does not promise a decision deadline for SBA, does not describe a hearing, and does not provide for any court review. It does not address lender-level declines and does not say how to apply again. It does not tell you what to include in the request. And the section was last amended at 88 FR 21085 (April 10, 2023) according to the eCFR text read on November 2, 2026; check the current rule and your denial letter before relying on a date.

A short preparation plan

Start with the denial letter. Copy every stated reason onto a list, one per line, because the standard in 120.193 is to overcome all legitimate reasons. Mark each reason as one of three kinds: a factual error you can document, a weakness you can fix with new information such as added collateral or updated financial statements, or a limit you cannot change inside the window. Then decide whether a reconsideration request can honestly address the full list. If it cannot, a request that fixes some reasons does not meet the text, and a new application after six months may be the better use of your time.

Keep your own calendar of the window, using the date the calculator above gives and the date on your denial letter, and send the request with time to spare. The section does not say whether a request is timely when mailed or only when received, so do not leave it to the last day.

Sources

• 13 CFR § 120.193, Reconsideration after denial. Read November 2, 2026.

Text read: Electronic Code of Federal Regulations, Title 13, Part 120, current through the eCFR issue date of October 29, 2026. Dollar figures and percentages on this page are the ones printed in those sections as of that date; SBA can amend the rule and publishes loan-program procedures (such as SOP 50 10) that add detail this page does not cover. Confirm current terms with an SBA-approved lender or at sba.gov. This page summarizes the regulation and does not replace it.