SBA Loan Documentation: What to Prepare Before You Apply

Summary

• SBA-backed loans can help qualifying small businesses access financing, but the application process requires detailed documentation.
• Requirements can vary by SBA program and lender, so confirm the exact checklist with your financial institution.
• Expect to gather information about your business, ownership and management, tax returns, bank statements, credit, financial statements, debt and legal documents.
• SBA 504 loans may require additional documentation related to owner-occupied real estate, job creation or public policy goals and environmental impact.

Small Business Administration (SBA) loans are offered through individual lenders and backed in part by the SBA. That backing reduces some of the lender's risk and can make financing available in situations where a lender might otherwise consider a loan too risky.

The tradeoff is documentation. SBA loan applications can require detailed information about your business, its owners and its financial condition. Knowing what you may need before you apply can help you organize the process and identify missing information early.

Your lender may have additional requirements, so use this list as a starting point and confirm what applies to the specific loan program you are considering. If you're still comparing loan types, explore First Financial's government-backed financing options to see where SBA loans may fit into your broader financing plan.

Start with Basic SBA Eligibility Requirements

Before gathering paperwork, make sure your business can document the basic eligibility requirements identified for SBA financing:

• The business is for profit and operates in an eligible industry.
• The business qualifies as a small business under SBA guidelines.
• Anyone who owns 20% or more of the business is a U.S. citizen or legal permanent resident.

Eligibility and documentation requirements can vary by loan type and lender. Your financial institution can provide the complete list that applies to your application.

Documents to Prepare for an SBA Loan

Organizing your paperwork by category can make the checklist easier to manage.

Business Background and Management Information

Depending on the loan program, you may need to provide:

• SBA Form 1919 or SBA Form 912 for 7(a) loans and microloans. These forms document personal background information. Financial institutions usually provide their own forms for 504/CDC loans.
• Resumes for people in company management.
• A business plan.
• A statement showing how long the business has been operating.
• Legal documents such as franchise agreements, business licenses, proof of incorporation or organization for corporations and LLCs, leases and third-party contracts.

Personal and Business Financial Records

Be prepared to gather financial information for both the business and its owners, including:

• Personal tax returns.
• Business tax returns.
• One year of personal bank statements.
• One year of business bank statements.
• A business balance sheet.
• A profit and loss statement.
• A business debt schedule.

Credit, Guarantees and Collateral

The application process may also include documentation or authorization related to credit and repayment support:

• Approval for the lender to review your personal FICO® Score.
• Your business credit score, usually reported through FICO® Small Business Scoring Service℠.
• A signed personal guarantee to repay the loan with personal assets in the event of default.
• Documentation of any collateral you may be asked to offer to help secure the loan.

Additional Documentation for SBA 504 Loans

SBA 504/CDC loans can come with additional documentation requirements. The source material identifies these items:

• Documentation showing that at least 51% of purchased real estate is owner-occupied.
• Documentation related to meeting job creation or public policy goals.
• An environmental impact statement.

Because 504 loans have program-specific requirements, ask your lender which forms and supporting documents apply before you submit your application.

A Practical Next Step

You do not have to gather every possible document at once. Start with the records you already have, group them by category and note anything that is missing. If you're still deciding how to fund your business, compare small business financing options before you apply. Once you know which SBA program you're considering, talk with a commercial lender about the documentation your application may require.

A complete checklist from your lender can help you focus on the documents that apply to your business and avoid spending time on items that are not required for your loan type.