After a successful initial consultation, next in the SBA 7(a) loan process is the lender’s initial document request. They ask for a wide variety of documents, aiming to get a full, comprehensive view of the borrower and business.
These documents are the foundation of the lender’s due diligence process. Although the lender will need more documents throughout the loan process, the documents requested here contain the bulk of the information the lender will base their decisions on.
Commonly Requested Documents
The exact list of documents that the lender asks for changes from loan to loan. However, these are the documents that are typically requested for all loans:
Personal
• 1040 Personal Tax Returns
The borrower must submit their 1040 personal tax returns from the past three years. Together with the Personal Financial Statement, this is to get an idea of the borrower and their personal finances.
• Personal Financial Statement
The borrower must complete and submit a Personal Financial Statement detailing their current personal assets and liabilities. Together with the tax returns, this is to get an idea of the borrower and their personal finances.
• Resume
The borrower must submit a resume and personal information form. This is to learn more about the borrower, their business experience, and their ability to run the business successfully.
• Signed Credit Authorization
The borrower must submit a signed credit authorization form. This is so the lender can pull their credit report.
• Copy of Driver’s License
The borrower must submit a copy of their driver’s license. If they don’t have a driver’s license, they must submit a different form of official identification. This is to ensure that they are who they say they are.
Business
• Business Financials
The borrower must submit a variety of financial documents from the business. This includes business tax returns and profit and loss statements for the past three years, a current year-to-date interim financial statement and profit and loss statement, and the business’s current balance sheet. This is to get an idea of the financial state of the business, both currently and in the past. If the business is less than three years old, the borrower must submit business financials for the years the business was operational.
• Business Entity Documents
The borrower must submit a copy of the business’s Articles of Incorporation, Certificate of LLC Formation, Certificate of Partnership Formation, or equivalent. This is to ensure that the business is real and what the borrower says it is.
Conditionally Requested Documents
While there are documents that are requested for every (or almost every) SBA 7(a) loan, there are others that are only requested if applicable to the particular loan. Here is a list of some common conditionally requested documents:
• Purchase and Sale Agreement
If the purpose of the loan is to purchase real estate or a business.
• Affiliate Business Financials
If the borrower already owns one or more other businesses. An “affiliate” is another business owned by the borrower. Usually, the same financial documents are required from affiliates as from the business the loan is for, including three years of business tax returns and profit and loss statements, the year-to-date interim financial statement and profit and loss statement, and the current balance sheet.
• Lease(s)
If the business has leases, such as for commercial real estate or equipment.
• Franchise Agreement
If the business has a franchise agreement.
• Additional Collateral Documents
If the lender requires additional collateral for the loan.
