Short answer: banks and SBA lenders underwrite to your tax returns. A loss, a partial year, or a one-time expense can sink the application even if the business is healthy. Asset-based bridge loans can carry you until the next set of returns supports a cheaper loan.
Real examples
- A veteran-owned hotel had only a partial year of operations after the owner bought it back at auction. Conventional lenders passed; the path is an SBA 504 once the operating history is documented, and an appraisal that values it as an operating hotel rather than land.
- A California manufacturer had a year-to-date loss after a big one-time payment. A bridge now, with SBA later, works around it.
What to do
- Explain one-time items in writing; lenders can add some back.
- Use your property as collateral for a bridge while you build the record.
- Line up the permanent loan you'll refinance into before taking the bridge.
Related: Bridge loans · SBA 504