Documentation for SBA Loans
To Meet the Basic Requirements for SBA Eligibility:
- Be a for-profit business in an eligible industry.
- Qualify as a "small business" under SBA guidelines.
- Anyone who owns 20% or more of the business must be a U.S. citizen or legal permanent resident.
Give Yourself Some Credit
One option to increase your funds is to get a line of credit, which is a type of loan that gives you short-term or seasonal funds.
Basically, a line of credit is very similar to a credit card, with the notable exception that interest on a line of credit is lower and may be tax deductible. You borrow cash, using your business assets as collateral, and pay back the principal and interest on any outstanding balance each month.
A long-term credit loan usually lasts up to five years, and is helpful if you want to have money for operating costs until your business turns a profit. Lenders typically require that you provide collateral or sign a promissory note on this type of loan and pay it back in installments. Of course, you should always be wary of getting into unnecessary debt or borrowing more than you can afford to pay back.
Needed Documentation
The following is a list of the basic documentation required for SBA loans:
- For 7(a) loans and microloans, you will need SBA Form 1919 or SBA Form 912. These document your personal background. Financial institutions usually provide their own forms for 504/CDC loans.
- Anyone in company management will need to submit a resume.
- A business plan.
- A statement of how long you've been in business.
- Your personal tax returns.
- Your business tax returns.
- You'll give approval for your bank or credit union to check your personal credit score.
- Your business credit score, usually reported by FICO Small Business Scoring Service (SBSS).
- A year's worth of personal bank statements.
- A year's worth of business bank statements.
- A Balance Sheet for your business. (Don't have a Balance Sheet? Learn how to make one with the Bookkeeping Coach with Union Bank's Financial Wellness Program.)
- A Profit and Loss Statement for your business. (Don't have a P&L Statement? Learn how to make one with the Bookkeeping Coach with Union Bank's Financial Wellness Program.)
- A copy of your business debt schedule.
- A signed personal guarantee to pay back the loan with personal assets in the event of a default.
- Legal documents, such as franchise agreements, business licenses, proof of incorporation or organization (for Corps and LLCs), leases, and third-party contracts.
- You may also be asked to document the collateral you are willing to offer to help secure the loan.
For 504/CDC loans, there are a few additional requirements:
- Documentation that at least 51% of the real estate purchased is owner-occupied.
- Documentation of successfully reaching goals of job creation or public policy.
- An environmental impact statement.
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