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What You Need to Complete the SBA Personal Financial Statement for 7(a) and 504 Loans

The SBA personal financial statement gives the U.S. Small Business Administration (SBA) the ability to assess the creditworthiness and financial standing of business owners who apply for government-backed loans. If you plan to apply for a 7(a) or 504 loan from the SBA, expect to fill out SBA Form 413, which lays out your financial situation.

What is the SBA personal financial statement?

The SBA personal financial statement, or Form 413, is required from business owners applying for certain SBA loans. The SBA is not a lender, but instead guarantees loans made through partner lending institutions. The SBA requires Form 413 from those applying for 7(a) and 504 loans, two common SBA loan programs for small business owners, as well as surety bonds that secure a contract.

The SBA wants to see your sources of income and the value of your personal assets, in addition to any debts, to assess your creditworthiness and ability to repay a loan. (Business assets and liabilities would be covered in other paperwork the SBA requires.) If you don’t complete Form 413, the SBA may not approve your application for financing. Below, we’ll discuss the components of the form to help you prepare your personal financial statement for the SBA.

SBA Form 413 instructions

You can find Form 413 as a downloadable PDF on the SBA’s website. Here’s a breakdown of each section of the form if you’re wondering how to fill out the SBA personal financial statement.

Basic information

The first portion of Form 413 asks for your name, home address, home and business phone number and the name of your business. Each business partner, managing member (if you own an LLC), owner with at least a 20% stake or person guaranteeing the loan would need to fill out their own financial statement.

Assets and liabilities

The next portion of the form asks you to summarize your assets and liabilities. Your assets would include personal funds, such as cash, stocks and bonds, retirement accounts and valuable personal property, like real estate and jewelry.

On the other hand, your liabilities represent money that you owe to others. Outstanding loans such as car loans or other installment loans (including student loans), plus accounts payable, credit card debt and mortgages would contribute to your liabilities. You will need to provide more details about both your assets and liabilities in later sections.

Documents needed for assets

Here are the documents you may want to have on hand when filling out the sections related to your personal assets:

  • Checking and savings account statements
  • Account statements from your IRA, 401(k) and other retirement accounts
  • Loan agreements and promissory notes on any money you’ve loaned to others
  • Your life insurance policies
  • Statements for your stocks, bonds and other securities holdings
  • Personal balance sheet and income statement
  • Real estate holdings, including any deeds, insurance policies and current market values
  • Current value of any vehicles you own
  • Values of personal property like jewelry, artwork and antiques
  • Financial information regarding any other assets you own
Documents needed for liabilities

When completing the sections regarding your liabilities, you may need to reference the following documents:

  • Notes payable showing personal money owed to banks or other lenders
  • Vehicle loan and lease installment account statements
  • Statements for any other installment loans, such as student or personal loans
  • Life insurance information
  • Mortgage and home equity line of credit balances
  • Statement of any taxes owed, including income and property taxes
  • Information related to any other liabilities

Section 1: Sources of income

You’ll need to provide your total income broken down by source. The form includes space for your salary, net investment income and real estate income. There is also space to describe the “other” income that you receive. You cannot categorize alimony or child support payments as income.

This section also asks for your contingent liabilities. A contingent liability is a debt that may occur depending on the outcome of a future event. An example includes any pending legal claims or judgments — a liability would arise if any judgments are ultimately filed against you. Or, you might have cosigned a loan for someone else. If your co-borrower defaults, that would be a liability you might have to pay.

Section 2: Notes payable to banks and others

The next section requires you to provide details about any debt that you owe to banks and others. You must disclose to whom you owe money, the original balance that you borrowed and the current balance of your debt, as well as how much you make in payments and how frequently you make those payments. You also must indicate whether the debt is secured or endorsed and the type of collateral you used to back the financing.

Section 3: Stocks and bonds

If you have stocks or bonds that contribute to your assets, you’ll need to outline the details of your shares. The form requires your number of shares, cost, current market value, the date the value was calculated and the total value. You would need to provide that information for each stock and bond you own.

Section 4: Real estate owned

Any real estate you own plays into your overall net worth. Form 413 provides space to describe up to three properties, including the type of real estate, original cost, present market value, mortgage holder information and other details, such as if you are up to date on your payments or you’ve paid a mortgage in full. You can attach additional information if needed, as long as you sign each attachment.

Section 5: Other personal property and other assets

This section is reserved for any personal property or assets that you included at top of the form but did not describe in the previous section, such as vehicles or jewelry. You’ll need to indicate the make, model and year of any vehicles, as well as information about any liens or delinquencies, if applicable.

Section 6: Unpaid taxes

Describe any unpaid taxes that you included in the liabilities column at the start of the form. Your description needs to include the type of taxes you owe, to whom you owe the taxes, when they are due, the total amount and to what property a tax lien is attached, if applicable.

You could also expect the SBA or your lender to request your income tax transcripts from the IRS. The lender would need to verify your tax transcripts before approving your loan application.

Section 7: Other liabilities

For any other liabilities that didn’t fit into the categories above, you may describe them in this section. Remember that SBA Form 413 is focused on your personal finances — don’t include your business debts when evaluating your personal liabilities.

Section 8: Life insurance held

The last section of Form 413 asks for information about your life insurance policies. You must disclose the face amount — also known as the death benefit — and applicable cash surrender value upon cancellation of all of your policies. You also need to provide the name of the insurance company, as well as beneficiaries.

Where to find help filling out your personal financial statement

You could find help filling out your SBA personal financial statement, such as how to fill out assets and liabilities, from SBA-affiliated organizations like SCORE and America’s Small Business Development Center.

SCORE offers free mentorship and education to small business owners across the U.S. in partnership with the SBA. Small Business Development Centers, or SBDCs, also offer free business consulting, as well as at-cost training programs. You can find your nearest SBDC based on your state or zip code.

If you’re unsure about any aspect of your SBA personal financial statement, consider going over the template with a mentor or business consultant. Ensuring your financial information is accurate would bring you one step closer to being approved for an SBA loan.

 

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