What Documents Are Needed for an SBA 7(a) Loan?
All the documents your lender will need for your SBA 7(a) loan
The SBA 7(a) loan process involves many documents that the borrower must prepare and send to the lender, including financial statements, tax forms, licenses, insurance policies, and more. These documents are usually requested in two sets: the initial document request and the closing document request.
The initial loan documents offer a comprehensive view of the borrower and the business’s operations, financial health, and legal standing. These documents are foundational, as they will form the basis of the lender’s evaluation of the loan.
The loan closing documents give the lender assurance that the business will be fully operational, licensed, and insured, as well as that the loan is eligible for an SBA guarantee.
Exactly what documents the lender requests varies based on the borrower, business, and loan.
Common SBA 7(a) Loan Documents
Here are the documents usually required for SBA 7(a) loans. We’ve split them up into the initial and closing loan document requests, with the initial loan document request further split into personal, business, and conditionally requested documents.
Initial Loan Document Request
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 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
• 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.
Closing Loan Document Request
• Current Financial Statements
Considering some time will have passed since the initial document request, the borrower must submit new, up-to-date financial statements for the borrower and business.
• SBA Forms
The borrower must submit a completed SBA Form 1919 (Borrower Information). Additional SBA forms may be required depending on the loan.
• Insurance Policies
The borrower must submit copies of the business’s insurance policies. The lender usually requires robust insurance coverage on the business, including insurance on the business and its assets, the property (if applicable), and workman’s compensation insurance. Additional types of insurance may be required – it depends on the business.
• Licenses
The borrower must submit copies of any licenses or certifications the business has/needs.
• Equipment List
The borrower must submit a list of all of the business’s notable pieces of equipment and their estimated values. For example, for a convenience store this could include fridges, shelves, and fryers/ovens.
Tips for SBA 7(a) Loan Document Preparation
• Be Fast and Responsive
Both document requests are usually substantial, and as such, these parts of the loan process can be lengthy [See: How Long Does the SBA 7(a) Loan Process Take?]. Speed in document preparation and responsiveness to the lender are vital to making the loan process as quick and easy as possible.
• Ensure Completeness and Accuracy
Considering these documents are necessary for the loan to be underwritten, closed, and submitted for an SBA guarantee, attention to detail is key. It’s important to make sure that every document is complete and all information is accurate and up-to-date.
• Prepare Documents in Advance
Many commonly requested documents, such as licenses, insurance, and up-to-date financial statements, can be obtained and/or prepared in advance. This is recommended, as it can save a lot of time.
• Utilize Professional Help
It’s recommended to outsource things like the preparation of financial and legal documents to professionals. This ensures the documents are prepared correctly.
• Be a Good Partner to the Lender
You’ll be working closely with the lender on these loan documents, so it’s important to be responsive, collaborative, and polite.
