What Documents Are Required for an SBA 7(a) Loan Application?
Applying for an SBA 7(a) loan can be an excellent financing option for small businesses. This loan program, offered by the U.S. Small Business Administration (SBA), provides financial support to businesses that might otherwise struggle to obtain traditional commercial loans. If you're considering applying for an SBA 7(a) loan, it's essential to prepare all the necessary documentation to streamline the process. Below, we outline the most commonly requested documents.
Business Plan
A strong business plan is crucial. This document should outline the nature of your business, target market, marketing strategy, operational plan, and financial projections. A well-prepared business plan demonstrates your company’s viability and growth potential, which is critical for loan approval. You can find downloadable templates in our tools section to help you create an effective business plan and financial projections.
2. Tax Returns
Personal and business tax returns from the last three years are required. These documents help lenders assess your business’s financial health and your history of meeting tax obligations.
3. Financial Statements
Financial statements, including the balance sheet, income statement, and cash flow statement, provide a clear picture of your company’s financial position. Lenders typically request current-year financial statements as well as those from the previous year.
4. Personal Financial Statement
If you own or have a significant stake in the business, you will need to provide a personal financial statement. This document lists your personal assets, liabilities, income, and expenses, helping lenders evaluate your ability to support the loan. This form is usually completed with guidance from your banking specialist or financial advisor.
5. SBA Form 1919
This form is the SBA Business Loan Application. It must be completed by the loan applicant and any owner with a 20% or greater stake in the business. It collects information about the business, its owners, and the intended use of the loan funds. Download here
6. SBA Form 413
The SBA Form 413 is the Personal Financial Statement. Every owner with a significant stake in the business must complete this document, detailing personal assets, liabilities, and net worth. Download here
7. Business Contracts
Lenders may also require copies of various business contracts, including lease agreements, purchase contracts, operating agreements, articles of incorporation, and any other relevant legal documents. These documents help verify the business’s legal structure and operations.
8. Loan Details
You must provide specific details about the amount of money you want to borrow and how you plan to use the funds. This includes a detailed breakdown of projected costs and how the loan will benefit your business.
9. Credit History
Lenders will review both your personal and business credit history. A strong credit score can improve your chances of loan approval, while a problematic credit history may require additional explanations or collateral.
10. Collateral and Guarantees
You may need to provide information about any collateral or guarantees backing the loan. This could include properties, equipment, inventory, or other assets.
11. Other Required Documents
Depending on your business’s specific circumstances and the lender’s requirements, additional documents may be needed, such as business licenses, permits, insurance policies, and certifications.
Conclusion
Preparing all the necessary documents for an SBA 7(a) loan may seem overwhelming, but being well-organized can significantly improve the speed and success of your application. Carefully review all requirements and consult with your lender or your Capifinders advisor to ensure nothing is missing and to choose the right SBA lender for your needs.
At Capifinders, we are ready to listen to your needs and help you navigate the many financing options available in the market.
