SBA Form 413 – Personal Financial Statement Template Form – Although SBA Form 413 seems to be a daunting task at first glance, it becomes a lot more doable if you break it down into separate stages. In this guide, we’ll take you step-by-step through the SBA personal financial statement, explaining what information is required for each section and, ultimately, how to complete the form for your SBA loan application submission.
What Is SBA Form 413 And How Does It Work?
SBA Form 413, often known as the Personal Financial Statement, is a form that must be submitted with every loan application for most SBA lending programs. In a nutshell, the Small Business Administration utilizes this form to assess your personal financial situation and estimate your capacity to repay a prospective loan.
At the top of SBA Form 413, the Small Business Administration (SBA) states that it “uses the information required by this form as one of a number of data sources in analyzing the repayment ability and creditworthiness of an application for an SBA guaranteed 7(a) or 504 loan or, with respect to a surety bond, to assist in recovery in the event that the contractor defaults on the contract.”
You may be asking why the Small Business Administration (SBA) is interested in your personal finances if you’re looking for a business loan.
Fundera strategic sales lead Alex Goldklang says the Small Business Administration (SBA) will look at your company’s debt service coverage ratio (DSCR) as well as your worldwide DSCR, and your personal finances will figure towards your global DSCR. You must pass both tests in order to be authorized for an SBA loan. “
Put another way, these measures demonstrate the ability of a company owner to pay his or her debt. According to Goldklang, the easiest approach for the SBA to determine an applicant’s capacity to repay debt is to look at the applicant’s monthly debt commitments.
To put it another way, while it’s critical to accurately report all of your liabilities and assets on your SBA personal financial statement, you’ll also want to be careful when providing information on any installment accounts that you pay on a monthly basis, such as car loans, student debt, and rent or mortgage payments.
Who Is Necessary To Complete SBA Form 413?
SBA Form 413 is required as part of the application process for the majority of SBA loan programs, including the 7(a) loan and 504/CDC loan, which are among the agency’s most popular loan programs.
Additional individuals may be required to complete and submit their own versions of the SBA personal financial statement depending on the nature of your business entity. These individuals include, but are not limited to:
- Each and every proprietor
- Each limited partner who owns 20% or more of the partnership, as well as each general partner
- Each shareholder who owns 20% or more of the voting shares has one vote.
- Any person who acts as a guarantor for the loan is
Please keep in mind that if you are married and file a joint tax return, your spouse will need to be included on SBA Form 413 as well. In a similar vein, each applicable spouse from the list above will be required to sign their respective copies of SBA Form 413 as well.
In Order To Complete SBA Form 413, The Following Information Is Required:
Overall, the process of submitting an SBA loan application takes a significant amount of time. Because of this, you’ll want to acquire extra documents and information ahead of time, particularly when filling out SBA Form 413, to assist simplify the process.
Most of these papers will not be requested by the SBA, but you may reference them to offer accurate current assessments and supplementary information about all of your relevant assets and obligations. In light of the above, you’ll want to make certain that any papers you consult—and may be required to provide—are dated within 30 days of the “as of” date specified on your application (which we’ll discuss more below).
To keep this in mind, below are some of the papers you’ll want to acquire ahead of time to assist you in filling out the SBA personal financial statement form.
- Personal bank statements, including checking and savings accounts
- Statements from individual retirement accounts (IRAs) and statements from other retirement accounts
- Documents pertaining to life insurance
- Individual investments such as stocks and bonds are documented in these documents.
- Pay stubs showing your yearly salary are required.
- Documentation demonstrating any extra sources of income
- Market information on your automobiles, residences, and other individually held property is provided.
- Financial paperwork for personal debt includes mortgage bills, vehicle loan statements, credit card statements, and evidence for any other debt.
You’ll want to examine SBA Form 413 before you begin filling it out, as we’ll demonstrate in the stages that follow. This way, you’ll know precisely what information you’ll need to supply, as well as any supporting papers you may need to check in order to complete this personal financial statement properly.
How To Complete Form 413 Of The Small Business Administration
With all of this background information in mind, let’s get down to the business of explaining how to complete SBA Form 413 in detail.
Step 1: Enter The Bare Minimum Of Company Information
Your personal contact information will be required in the first stage of completing SBA Form 413 (pictured below), which is the most basic part of the process. For married couples who will be supplying information regarding their spouse’s personal financial information, you’ll want to be sure to include their names in this area, as well.
In the center of this section of the form, at the top, you’ll notice a box labeled “As of.” Filling up this area is optional. This field does not necessarily correspond to the present date; rather, it informs the Small Business Administration (SBA) of the date up to which the information you gave is correct. For appraisals, the “as of” element is very crucial since the information must be as up to date as feasible.
For this reason, it is best practice to specify the last day of the month before the month in which you are applying (e.g., September 30 if you are applying in October) when submitting your application. Also, bear in mind that your SBA Form 413 must be dated within 90 days of the date on which your company loan application was submitted.
Fill In The Blanks With Information About Your Assets In Step 2
The “Assets” portion of your SBA personal financial statement will be the next section you’ll fill once you’ve completed the basic information at the start of your SBA personal financial statement.
This step will need you to fill in the following pieces of information, rounding your values to the next dollar number as you go along.
- You and your spouse’s checking accounts have a certain amount of money in them in cash and in banks.
- Savings accounts: make sure to include the amount in any money market or certificate of deposit accounts.
- Retirement accounts: The value of any IRAs or other retirement accounts in your name, as well as the value of any retirement accounts in your spouse’s name (if applicable).
- Accounts receivable and notes payable: In the event that you’ve personally lent money and that amount is still owing to you, you’ll just need to complete one form.
- Life insurance with a cash surrender value: You should state the financial amount you would get if you were to terminate your life insurance policy if it offers a cash payment. Term life insurance does not qualify for this discount since it is a full life insurance policy. Section 8 will go into further depth on stocks and bonds. Stocks and bonds: Make a list of the current market value of all stocks and bonds that you and your spouse hold.
- Real estate: Make a list of every commercial and residential real estate that you and your spouse possess, together with the current fair market value of each. This will be discussed in further detail in Section 4. Automobile: The current fair market value of any autos, boats, aircraft, or other modes of transportation that you and your spouse possess (excluding automobiles that you are leasing).
- Personal property other than those listed above: Estimate the total value of all the valuable material goods you possess that you might sell for cash but that do not fit into any of the categories listed above. (Consider your house, jewels, gadgets, and antiquities as examples of valuables.) Detailed information on this will be provided in Section 5. Other assets: Estimate the worth of any other assets you hold that do not fit into the categories listed above, such as the value of your ownership stake or stock in your company. You should seek a professional valuation for this, but if that is not feasible, you should undervalue your estimate in order to avoid being charged with fraudulent activity. This will also be discussed in further depth in Section 5.
- Total: Add up the total dollar worth of all of your possessions.
Step 3: Make A List Of All Of The Things You Want To Do. Fill Up The Blanks With Information About Your Liabilities
The liabilities box may be found on the right-hand side of the “assets” section, just below the “assets” section. As with your assets, the same regulations apply in this case: you’ll record your obligations on your personal financial statements (as opposed to your company financial statements), and if you’re married, the liabilities you own jointly with your spouse will be recorded as well.
- Accounts Payable (also known as payables): Essentially, any loans you owe to a third party other than a bank, which are often on a short-term basis, fall into this category (i.e. 30, 60, or 90 days). The majority of candidates will be able to leave this area blank.
- Notes payable to banks and other financial institutions: The next section contains a listing of all outstanding amounts on your personal credit cards, lines of credit, and commercial installment loans. This information will be discussed in further detail in Section 2.
- Account for automobile installments: Provide the entire amount of your outstanding automotive loan debt, as well as the amount of your monthly payment.
- Account for other installments: List the entire amount of any outstanding personal installment loans on your books, as well as the amount of each monthly payment, including student and personal loans.
- Borrow money against your life insurance policy and provide the amount of any loans you’ve taken out against which you’ve pledged your insurance policy as collateral (only if it was whole life insurance).
- Mortgages secured by real estate: The amount owed on your mortgage on your own real estate.This will be discussed in further depth in Section 4.
- Taxes owed but not paid: Include any taxes owed but not paid since your most recent tax return was filed. This will be discussed in further detail in Section 6.
- In this area, you should include the total amount of any additional outstanding debt that was not included in the preceding sections. However, if you have any extra obligations, you may outline them in detail in Section 7. The majority of applicants do not have any additional liabilities.
- Liabilities in total: Add up all of your debts and obligations to get a total.
- Net worth is calculated by subtracting your entire obligations from your total assets to find out how much money you have.
- Total: Add your “Total Liabilities” and your “Net Worth” together to get your net worth. This amount should be equivalent to the entire value of your assets.
Step 4: Make A List Of All Of The Things You Want To Do. Fill Out Section 1 With Information About Your Sources Of Income And Potential Obligations
The last portion of page 1 of SBA Form 413 is the assets and liabilities sections, which you will complete once you have completed the previous sections. This portion, referred to as “section 1,” will ask you for information about your sources of income and potential obligations, as seen in the figure below.
What is your source of income?
You’ll need to fill in the blanks for the following:
- Salaries: Please include the entire yearly salary earned by you and your spouse, as shown on your tax return.
- Include any income from your investments, such as dividends and interest, in your net investment income statement.
- Describe the net revenue you receive from any of your owned real estate holdings, such as sales, leases, or rentals.Make sure to include your net income, which is the amount of money you make after deducting your costs.
- Other sources of income: Please provide the total amount of any money received from sources other than those specified above. This may include alimony, child support, a pension, social security, and other forms of compensation. It is crucial to remember, however, that alimony and child support payments should not be included if you do not want them to be included in your overall income. Describe the sources of this income in the box below labeled “description of other income in section 1” (description of other income in section 1).
Contingent liabilities are liabilities that may or may not materialize.
If specific criteria are met, contingent liabilities relate to the obligations for which you will be held liable. If you believe that such circumstances are likely to materialize, you’ll need to estimate the quantities of your contingent obligations.
- If you or your spouse served as guarantor or co-signer, the whole sum of any outstanding debts for which you or your spouse served as guarantor or co-signer will be deducted from your income and tax refund.
- Legal claims and judgments: the total amount you may be required to pay in connection with any outstanding legal claims or judgments.
- Provision for federal income tax: The amount of money you’re putting away to pay federal taxes in the event that your income is likely to grow as a result of ongoing litigation, a dispute, or the sale of an asset, for example.
- Any additional outstanding contingent obligations that are not specified above are referred to as “other special debt.”
Step 5: Complete Section 2 With Your Notes Payable To Banks And Other Third-Party Organizations
Following that, you’ll complete Section 2 by providing further explanations for all of the obligations indicated as your Notes Payable, which you included in the Liabilities column above. You should make use of the table supplied (as shown below) and provide a supplementary page if you want more room. If you add attachments, make sure they’re clearly labeled as part of your SBA personal financial statement and that they’re signed by you.
As a result, in this area, you’ll provide the following information for each individual debt:
- The note’s holder’s name and address are as follows: The name and address of your creditor, if you have one,
- The sum owing at the time the credit was created was known as the “original debt.” In the case of credit cards and lines of credit, this will be $0. In the case of installment loans, this will be the complete amount of the loan.
- The amount you owe at the moment is known as your “current balance.”
- Payment amount: the amount of money you pay toward this obligation on a monthly basis. If you’re taking out an installment loan, make a note of the amount you’ll be paying each month. If it’s a credit card or a line of credit, you’ll include “varies” in the description.
- Frequency: Whether or not you pay your loan payments on a monthly or weekly basis is up to you.
- What sort of collateral is secured or endorsed, and how it is secured or endorsed: In your loan application, describe the sort of collateral you provided to obtain your loan. If the credit card was unsecured (as most credit cards are), indicate that it was “unsecured.”
Step 6: Fill Out Section 3 With Your Stocks And Bonds
The third portion will be introduced when section 2 has been finished. As you did with your Notes Payable, you’ll go into further detail in Section 3 about each stock and bond that you and your spouse own, which will be shown in the Assets column of your financial statement. Adding extra pages to SBA Form 413 is completely permissible, as long as they are clearly labeled as such and are signed by the person who is submitting the form.
As indicated in the following table, you’ll need to submit the following information for each stock and bond you possess:
- The number of shares in which you are a shareholder.
- Securities are referred to by their respective names.
- Its initial purchase price.
- Its current market value is represented by a quote or exchange.
- The date of quotation or exchange: the date on which you determined the current value of the quote or exchange.
- Total value is the sum of your number of shares multiplied by the current value of the stock.
Step 7: In Section 4, Fill In The Blanks With The Addresses Of The Properties You Own
After you’ve completed Section 3, you’ll go on to Section 4 (seen below), which asks for information about the real estate you own. You’ll go into more depth about all of the property you possess, which will be recorded in your Assets and Liabilities section.
- Depending on the kind of real estate, it might be your personal dwelling, an investment property, or undeveloped land.
- The location of the property is indicated by the address.
- The date on which you acquired the property is the date mentioned on your mortgage.
- The acquisition price of the property was the initial expenditure.
- Market value at the time of writing: Inquire with your broker about the property’s current market value.
- Identify the mortgage holder by providing the following information: The name and location of the bank that owns your mortgage
- The number of the mortgage account may be found on your mortgage statement.
- Mortgage balance refers to the amount owed on your mortgage at the time of writing.
- Your monthly or annual mortgage payment is equal to the amount of your monthly or yearly mortgage bill. If you’ve paid off your mortgage, you may put “N/A” in the box.
- The current status of the mortgage is as follows: Write “current,” “foreclosure,” or “paid in full” in the appropriate field.
In Sections 5 Through 8, Enter Information About Personal Property, Delinquent Tax Bills, Other Liabilities, And Life Insurance
Afterwards, you’ll fill out Sections 5 through 8 of this critical Small Business Administration form. As you’ll see below, each of these parts is organized around a description.
Personal property and assets are described in Section 5 of the report
The chance to go into additional detail about the “Other Personal Property” and “Other Assets” you specified in the Assets column, which will include the value of your interest in the firm, is provided in this section.
In order to demonstrate the worth of these goods, you should offer as much information as possible about them, and you should be prepared to produce proof to back up your claims. Having said that, you may not have a receipt for every item of property that qualifies for this exemption, such as your grandmother’s diamond necklace, and that is perfectly acceptable. You should only attempt to make an informed estimate as to how much money you would get if you sold your belongings; you should not, of course, purposefully undervalue or overvalue any of your possessions or assets.
It is also necessary to supply information about any previous loans that you have pledged any of these assets as collateral in order to be approved for this loan. You may use the Notes Payable section as a model for what information to add in your own notes payable section. Additionally, if any of these assets are subject to a lien, you’ll need to supply the name and address of the lienholder, the amount of the lien, as well as the terms and conditions of the lien payment. If the loan is in default, it will be necessary to explain the circumstances behind the default.
Section 6: A List of Taxes That Have Not Been Paid
Continuing with the Liabilities part, you will supply more information regarding any outstanding taxes that you may have, as indicated in the Liabilities section. However, even if you still owe taxes to your state or local government, you may still be able to qualify for an SBA loan—you just have to demonstrate that you are on a repayment plan. As a result, you’ll describe who you owe taxes to, when they’re due, how much you owe, and if any of your assets are subject to a tax lien in this section.
The seventh section contains a description of the other liabilities.
Upon completion of Section 6, you will go to the third page of SBA Form 413, which will begin with Section 7 of the document. This section will provide an explanation of any “Other Liabilities” that were indicated in the Liabilities column, if any such liabilities exist. These are liabilities that don’t exactly fall into the categories that have been supplied, such as debts owing to foreign governments or obligations arising as a consequence of private agreements. You should include information such as the sort of debt you have, who you owe payments to, how much you owe, and your repayment strategy in this section.
describes the nature of life insurance in Section 8.
In the end, Piece 8 will be the last section that you will need to complete in order to finish the major components of the SBA personal financial statement form. Describe all of the life insurance policies you own, including the death benefit, cash surrender value (if applicable), the names of your beneficiaries, and the name of the insurance firm that issued the policies.
Step 9: Review The Completed Form Once More
At this stage, the most difficult sections of SBA Form 413 have been completed. You’ll want to go over all of the information you’ve supplied on this form again now that it’s been submitted.
You’ll want to be certain that all of the information you’ve provided is true to the best of your abilities; after all, this statement will be utilized to assess your loan eligibility. You may also be susceptible to criminal prosecution if you deliberately make false representations on this form, according to the law.
Even so, it may be beneficial to have a third-party evaluate the form before you finish the final stages. This might be your company attorney, accountant, or loan expert. Being able to go through this document with a second, or even third, set of eyes will assist you in ensuring that everything is filled out completely and accurately and, ideally, will enable you to detect problems (if there are any) before they become a problem later on.
Step Ten: Sign And Date The Document
Following a thorough evaluation of all of the information included in your SBA personal financial statement, you have completed the last stage. To ensure that you have read and understood the material supplied by the SBA on pages three through six of the form, you will want to complete the “certification” before proceeding with the process.
The Small Business Administration (SBA) discusses the penalties for making deliberately misleading representations as well as statements required by law on these pages. If you have any concerns regarding what is mentioned on these pages, you should talk with your business attorney to have them answered.
As a result, after evaluating this information, you’ll want to return to the certification area, where you’ll enter your signature, printed name, date, and social security number, as well as any other pertinent information. It is also likely that your spouse may fill out this information on their own behalf.