An SBA 7(a) loan is the most common SBA loan and it is used for funding a wide range of general small business needs. SBA financing is one of the least expensive loan options available to small businesses, and the SBA backs 7(a) loans up to $5 million.
Applying for an SBA loan can be an overwhelming process if you're not prepared. To help set you up for success, let's look at the documents that you need to submit with your application. We also include tips for filling out the necessary individual forms.
Documents You Need
According to the SBA 7(a) loan guidelines, you must submit the following:
Your SBA loan application. This application (SBA Form 1919) includes basic information such as business name along with your name and personal information. You will answer a series of “yes or no” and “true or false” questions before signing your name at the bottom. Take your time to read the fine print and complete the form fully and truthfully.
Statement of Personal History (SBA Form 912): You and your business partners must meet the SBA definition of “good character.” The purpose of this form is to evaluate your trustworthiness by asking questions about your criminal history. While having a criminal record may not disqualify you from getting an SBA loan, failure to disclose will.
Personal Financial Statement (SBA Form 413): This purpose of this form is to evaluate your eligibility based on your personal net worth. Prior to filling out this statement, collect the most recent paperwork that reflects your assets and liabilities from the last full month. If you are married and filed a joint tax return, include both you and your spouse on this personal financial statement. Report all joint assets and liabilities, unless you have a legal document that specifically separates your marital assets, such as a prenuptial agreement.
Business Financial Statements: If you already own a business, you'll need to include the following statements to demonstrate your ability to repay the loan. If you own a startup, you can submit financial projections.
- Profit and Loss (P&L) Statement: This statement reports your business's profitability within the last 180 days of your application. You should also attach supplementary schedules from the last three fiscal years.
- Projected Financial Statement: This statement is a one-year projection of your income and finances. It should be detailed and include a written explanation of how you plan to achieve your projection.
Ownership and affiliations: If you own or are affiliated with any other business, include a list of the business's name and address.
Business certificate/license: Include your original business license, or your certificate for doing business. If your business is incorporated, stamp your corporate seal on your SBA loan application form.
Loan application history: If you have applied for a loan in the past, include those records.
Income tax returns: Attach signed income tax returns for the previous three years. These include both personal and business federal income tax returns for anyone who owns 20 percent or more of the business.
Résumés: Attach resumes for all applying business partners.
Business overview and history: In this statement, you'll provide a history of your business along with its challenges. Keep it brief and truthful; explain how an SBA loan will help your business.
Business lease: Attach a copy of your business lease. You can also include a detailed note from your landlord that list the terms of your lease.
If you are purchasing an existing business, you will need the following information:
- Current balance sheet and P&L statement of the business to be purchased.
- Previous two years federal income tax returns of the business.
- Proposed “Bill of Sale” including “Terms of Sale.”
- Asking price with schedule of inventory, machinery and equipment, furniture and fixtures.
Getting an SBA loan isn't easy, but 7(a) loans offer some of the least expensive financing available to small businesses. Certain lenders may require different documents than what's listed above, but if you can get these documents in order, you'll be on your way to obtaining SBA financing.
The post What Documents Do I Need to Apply for an SBA 7(a) Loan? appeared first on AllBusiness.com
The post What Documents Do I Need to Apply for an SBA 7(a) Loan? appeared first on AllBusiness.com.
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