SBA Loan Readiness: what lenders ask for, in plain English

Use this as a starting checklist. Every lender has its own requirements, and SBA rules change, so your lender’s list is the final word. Use your browser’s Print option to keep a copy.

1. What an SBA lender looks at

• Repayment ability: does the business earn enough cash to cover the new loan payment with room to spare?
• Owner credit and history: personal and business credit, and how past debts were handled.
• Equity injection: how much of your own money goes into the deal, and where it comes from. Startups and business purchases usually need one.
• Experience: whether the owners and managers have run this kind of business before.
• Collateral: what the lender can secure the loan with. SBA loans are not declined for lack of collateral alone, but available collateral is taken.

2. The forms you will likely see

• SBA Form 1919, Borrower Information Form: the business, its owners, and the loan request.
• SBA Form 413, Personal Financial Statement: assets, debts and income for each owner of 20% or more.
• SBA Form 159, Fee Disclosure and Compensation Agreement: discloses any fees paid to anyone who helps you with the loan application.
• IRS Form 4506-C: lets the lender verify your tax returns with the IRS.

Your lender may add its own application and forms.

3. The documents to start gathering now

• Business tax returns for the last three years
• Personal tax returns for the last three years, for every owner of 20% or more
• Year-to-date profit and loss statement and balance sheet
• Business debt schedule: each lender, balance, payment and rate
• Recent business bank statements
• Photo ID and a resume for each owner and key manager
• Formation documents: articles, operating agreement or bylaws
• Business licenses and permits

Plus, depending on your deal: a purchase agreement (real estate or a business), the seller’s financials (buying a business), current loan statements (refinancing), contractor bids or equipment quotes (expanding), or a startup budget and proof of your injection (starting up).

4. What goes in an SBA business plan

1. Executive summary
2. Company description and history
3. Products and services
4. Market analysis
5. Competition
6. Marketing and sales
7. Management and ownership
8. Operations
9. Use of funds (sources and uses)
10. Financial summary and projection assumptions
11. Risks and how you will handle them

5. Five mistakes that slow approvals

1. Projections with no explanation of how the numbers were built.
2. Missing or unsigned tax returns, or returns that do not match the financial statements.
3. No clear source for the equity injection.
4. A use of funds that does not add up to the loan amount.
5. Documents sent in pieces over weeks instead of one organized package.

This guide is general education, not legal, tax or lending advice. CommonRise is not a lender and does not guarantee approval.