A Comprehensive Guide to Required Documentation in an SBA 7a Loan Application

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When applying for a Small Business Administration (SBA) 7(a) loan, it’s essential to gather and submit various documents that provide a comprehensive overview of your business’s financial health, personal background, and potential collateral. This article aims to discuss the necessary documents, describing each one and explaining when it is required in the loan application process. We have ranked the items below by when they will be requested in the loan application process by the SBA lender you select.

The documentation and information requirements listed below may seem overwhelming for borrowers. Securing an SBA loan, similar to a traditional loan, demands time and effort. Our Lender Connect tool helps streamline the process by asking relevant questions. This enables us to efficiently match borrowers with potential lenders, while also providing clarity to borrowers who may not fit our lender network based on their initial responses. We address crucial topics that SBA bankers consider important, such as the financial health of the business and borrower, industry expertise, use of funds, and business maturity. Once borrowers complete our inquiry form and engage in initial discussions with SBA lenders, they progress to the next phase, which involves providing the banks with the comprehensive set of information and documents outlined below.


Requested SBA loan documents

Financial Statements or Tax Returns for the past three years

Financial statements or tax returns for the past three years are necessary to evaluate the historical financial performance of the business. These documents typically include balance sheets, income statements, and cash flow statements. Current financial statements should also be included to provide the most up-to-date information.


Cash Flow Projections for one year (if a new business)

For new businesses without an extensive financial history, a cash flow projection for the first year is required. This projection outlines expected revenue, expenses, and cash flow patterns. It helps assess the business’s ability to generate sufficient funds to cover expenses and repay the loan. Often, bankers will ask for cash flow projections for the next year for existing businesses as well. Ideal: EBITDA of at least 1.15x SBA loan payments.


Resumes/Biographies of Key Management Personnel

Resumes or biographies of key management personnel highlight their qualifications, experience, and skills. This information helps lenders assess the management team’s ability to lead the business successfully and manage the loan funds effectively.


SBA Form 1919 – Borrower Information Form

The SBA Form 1919 is a standard document that collects essential information about the borrower. It includes details such as the business name, address, legal structure, ownership percentages, and contact information. This form is typically required as part of the initial loan application process.


SBA Form 912 – Statement of Personal History

If questions 1, 2, or 3 on Form 1919 are answered affirmatively, the SBA Form 912 must be completed. This form requires detailed information about the borrower’s personal history, including criminal records, previous business experience, and past SBA loan applications. It assists the SBA in determining eligibility for the loan.


SBA Lender’s SBA Loan Application

The SBA lender’s SBA Loan Application is specific to the lender and includes their internal forms and documentation requirements. This application captures additional details and information needed by the lender to process the loan.


SBA Form 413 – Personal Financial Statement

The SBA Form 413 is used to assess the personal financial status of the borrower. It includes information about personal assets, liabilities, income, and expenses. This form helps the lender evaluate the borrower’s ability to repay the loan. It is a requirement for all individuals who own 20% or more of the business.


SBA Form 2202 – Business Debt Schedule

The SBA Form 2202 is used to document all existing business debts. This form provides a detailed overview of the business’s outstanding loans, including information on the creditor, original loan amount, current balance, and payment terms. It helps the lender assess the borrower’s ability to manage debt obligations.


Business plan

A well-structured business plan is vital for a 7a loan application. It provides a comprehensive overview of the business, including goals, strategies, market analysis, financial projections, and management team. It showcases the borrower’s industry understanding, market opportunities, competitive landscape, and ability to manage and grow the business. Some SBA lenders offer their own business plan templates for borrowers without a formal plan.


SBA Loan Use of Proceeds Schedule

The SBA Loan Use of Proceeds Schedule outlines how the loan funds will be utilized. It specifies the purposes for which the loan funds will be allocated, such as purchasing equipment, working capital, refinancing existing debt, or other business-related expenses.


Business Asset Listing

A comprehensive listing of all business assets is necessary to provide an overview of the business’s tangible and intangible assets. This may include inventory, equipment, vehicles, intellectual property, and other valuable assets.


Copies of all Notes and Leases to be refinanced

If the loan application includes refinancing of existing debts, copies of all notes and finance leases to be refinanced must be provided. This documentation helps the lender understand the terms and conditions of the existing loans and leases.


Real Estate Lease Agreement

If the business operates from leased premises, a copy of the lease agreement should be provided. The lease agreement outlines the terms of the lease, including the duration, rental amounts, and any specific provisions related to the property.


Real Estate Purchase Agreement

If the loan is related to a real estate purchase, a copy of the Real Estate Purchase Agreement must be included. This document outlines the terms and conditions of the property purchase, including the purchase price, financing arrangements, and any contingencies.


Stock or Asset Purchase Agreement

If the loan is associated with a stock or asset purchase, the purchase agreement must be submitted. This agreement details the terms of the purchase, including the price, assets included, and any warranties or representations made by the seller.


Franchise, Dealership, or Licensee Agreement (if applicable)

If the business operates under a franchise, dealership, or licensee agreement, a copy of the agreement must be provided. This document outlines the terms and conditions of the agreement, including obligations, restrictions, and fees.


Other Agreements

Any other significant agreements relevant to the business operations should be included. This may include single supplier source agreements, such as a fuel supply agreement, which demonstrates the business’s relationships and dependencies with key suppliers.


Articles of Organization

The Articles of Organization, also known as the Articles of Incorporation or Articles of Formation, are legal documents that establish the existence of the business as a separate legal entity. These documents are required for businesses organized as corporations, limited liability companies (LLCs), or partnerships.


Business Licenses

Documentation of valid business licenses is essential to demonstrate that the business is operating legally and in compliance with local, state, and federal regulations. This may include licenses specific to the industry or general business permits.


Documentations of Lawsuits, Judgments, and Bankruptcy

If the business or any owners have been involved in lawsuits, have outstanding judgments, or have filed for bankruptcy, supporting documentation should be provided. These documents give insight into the financial and legal history of the business and its owners.


Information supplied to SBA lender by third parties

After the above information is provided, SBA lenders often hire third-party professionals to provide background checks, credit checks, business valuations, real estate appraisals, and environmental investigation reports as needed. SBA rules mandate independent assessments, such as environmental investigations or real estate appraisals, to protect lenders and borrowers from potential risks or liabilities.


Background Check

In some cases, lenders may require a background check as part of the SBA 7(a) loan application process. This check helps assess the borrower’s credibility and character. It typically involves screening for criminal records, financial fraud, and other relevant information. Background checks provide lenders with a comprehensive view of the borrower’s background and help evaluate their suitability for loan approval.


FICO Credit Score

The FICO credit score is an essential factor in evaluating the borrower’s creditworthiness. Lenders will review the credit score to assess the borrower’s credit history and determine their likelihood of repaying the loan. The credit score is a numerical representation of the borrower’s creditworthiness, based on factors such as payment history, credit utilization, length of credit history, and types of credit used. A higher credit score indicates a lower credit risk and enhances the chances of loan approval. A credit score of 680+ is ideal for an SBA loan.


Business Valuation

A business valuation is required to buy a business with an SBA loan. It provides an assessment of the business’s fair market value, taking into account assets, revenue, and other relevant factors. A professional business appraiser or certified public accountant can help prepare this document.


Real Estate Appraisals

To assess the value of the property being purchased or used as collateral, real estate appraisals are required. These appraisals provide an independent evaluation of the property’s market value and help the lender determine the loan amount and collateral value.


Environmental Investigation Reports

In cases where the business operates in industries that may have environmental risks, such as manufacturing or hazardous materials handling, environmental investigation reports may be necessary. These reports assess potential environmental liabilities and compliance with environmental regulations.


The SBA 7(a) loan application requires a comprehensive set of documentation to evaluate the borrower’s financial stability, business operations, and collateral. By understanding the purpose and significance of each document, business owners can ensure they provide all the necessary information for a successful loan application. Working closely with their lender and preparing these documents diligently increases the chances of securing the desired financing for their business needs.

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