This article is for SBA loan applicants looking for instructions on how to fill out SBA Form 413 – the Personal Financial Statement (download form here), which is used to evaluate your loan eligibility based on the personal net worth of you and your spouse. This form is not designed to evaluate the financial state of your business, only that of you and your spouse.
Did you know that you don’t need to fill out any SBA forms for a 7A loan for $150,000 or less?
If you prefer to fill out the forms here is all the information you need:
If you and your spouse file a joint tax return, both you and your spouse’s name should be on the form. This does not mean that your spouse is a guarantor of the loan, but simply that you own joint assets. All joint assets should be reported on the form, unless you have a legal document, such as a prenuptial agreement, that specifically separates certain assets.
SBA Form 413 must be completed by:
- Each proprietor of the business.
- Each limited partner with 20% or more interest.
- Each general partner.
- Each stockholder owning 20% or more voting stock.
- Any person or entity providing a guaranty on the loan.
The SBA Form 413 Personal Financial Statement is three pages long. The first page provides an overview of your assets and liabilities, and subsequent pages detail the numbers provided on this first page. In other words, all of the sections on pages 2 and 3 refer to certain parts of the overview on page 1. This document provides step-by-step instructions on filling out your Personal Financial Statement.
SBA Form 413 Step-by-Step Instructions
Expiration Date – The expiration date is listed in the top right-hand side. Make sure that the form is current and has not expired.
“As of” Date – This indicates the date that all the information provided is based off of. It is recommended to go back to the previous month and use the last day of that month. For example, if you are filling out the form on September 10th, use August 31st as your “as of” date.
Name – If you are married and file a joint tax return you should provide both your name and your spouse’s name. This does not make your spouse a guarantor, but indicates that you own assets together.
Residence – Use your current address.
Business Name and Applicant Name – Write in the legal name of your business as it is shown on your most recent business federal tax return.
Business and Residence Phone – For business phone, provide a direct business line, not a secretary. For residence phone, give your cell phone to enable quicker communication.
Cash on Hand & in Banks – Provide the total amount in all your personal checking accounts, including individual accounts, joint accounts, and your spouse’s accounts.
Savings Accounts – Provide the total amount in all your savings accounts, money market accounts, and CDs.
IRA and Other Retirement Accounts – Provide the total value of all your Roth IRAs, IRAs, and 401ks. Make sure to include the value of any accounts from previous jobs that you may have forgotten to consolidate.
Accounts & Notes Receivable – This section includes any personal loans you have given people. This is not a commonly used section, but if you have lent any money include that here.
Life Insurance—Cash Surrender Value Only – This only applies to certain types of life insurance policies that include a cash payout when the policy is cancelled. If you have one of these policies, indicate the total you would receive. This does not apply to term life insurance policies.
Stocks and Bonds – Indicate the total value of all marketable securities owned by you, your spouse, and jointly. You will provide a full description of these securities in Section 3 on the 2nd page of this form.
Real Estate – List the value of all residences and commercial property that you own in your personal name. Include anything that would go on your personal tax return. You will provide a full description of these properties in Section 4 on the 2nd page of this form.
Automobile—Present Value – This section includes the present value of all of the cars, boats, and recreational vehicles you own. For cars, you can use the Kelley Blue Book for a quick appraisal. Do not include leased vehicles in this total.
Other Personal Property – Here you can include an estimate of the total value of your miscellaneous personal possessions, such as jewelry, tools, artwork, electronics, antiques, etc. Try to give an accurate and realistic estimate that does not inflate the value of your belongings.
Other Assets – This is a catch all section for all of your personal property, including the net worth of your ownership stake in any businesses. There are many ways to value a company, which you can find here. One way to determine the market value of the business is to determine the value if you were to sell it (including assets), and subtract the liabilities. Then divide this total net worth by your ownership stake. If you own 25% of a business with a market value $1.5 million and $500,000 in liabilities, you do the following calculation: $1.5 million – $500,000 = $1 million x 0.25. The value of your stake would be $250,000.
Total Assets – Here you add up the total of all your assets.
Accounts Payable – This section is for products and services purchased on credit or on a regular payment basis. This does not include credit cards or other personal lines of credit. This section is not commonly used.
Notes Payable to Banks and Others – This section is for the total balance of all your credit cards and personal lines of credit. It is recommended to get a credit report to make sure that you do not miss anything.
Installment Account (Auto) – This section is for the total of all your vehicle loans and leases, including cars, boats, airplanes, etc. Include the total outstanding balance, and total monthly payment. If you have multiple vehicle payments or leases, put the total combined monthly payment.
Installment Account (Other) –This section is for any other installment loans, such as student loans or other personal loans payable for more than one year. Put the total balance and total monthly payment for all the loans.
Loans on Life Insurance – If you have taken a loan against your life insurance policy, list the total amount outstanding.
Mortgages on Real Estate – Put the total amount you owe on all your personal mortgages. Do not put the original amount, only the current outstanding debt.
Unpaid Taxes – Include any unpaid real estate, income, or school taxes.
Other liabilities – This section is a catch all for any other liabilities you have not listed so far.
Total Liabilities – Add up the value of all your liabilities here.
Net Worth – This spot is for your total assets minus your total liabilities.
Total – Add you total liabilities to your total net worth.
SBA Form 413 Section 1: Sources of Income
Salary – Include all wage income for you and your spouse. Only include the amount that you report on your W2 or 1099 tax forms. If your company is an LLC and your salary is what you take out of the company, do not include this here, but rather as part of your ownership stake in the “Other Assets” section.
Net Investment Income – This section includes any income from dividends and interest from stocks and bonds.
Real Estate Income – This is your annual net income from rental properties after expenses.
Other Income – This section is for other income that you receive on a regular basis. This can include child support if you wish. Describe this income in the box provided.
As Endorser or Co-Maker – List the total outstanding debt on any loans you cosigned.
Legal Claims & Judgments – List any debts associated with pending lawsuits or legal claims.
Provision for Federal Income Tax – List the any money you are setting aside to pay expected federal income taxes.
Other Special Debt – This is another catch all for any other debts.
Section 2: Notes Payable to Banks and Others
This section details all your debts and accounts payable, such as credit cards, personal loans, and student loans. If you do not have enough space, attach another spreadsheet with the same information. If you need to attach an additional spreadsheet, be sure to include your name, “as of” date and “SBA Form 413 – Section 2”.
Name and Address of Noteholders: Try to enter the name and address of the banks that hold your debt. Space is limited, so use abbreviations if you need to. If you have multiple loans or credit cards from the same bank, list last four numbers or the account number so that it can be matched with a credit report.
Original Balance: Put the total amount when the account was first established. For credit cards, put $0. For other loans, put the initial loan amount.
Current Balance: Put the total amount that you currently owe.
Payment Amount—Frequency: Put the minimum payment and the schedule, which is usually monthly.
How Secured or Endorsed – Type of Collateral: Here you should indicate how your loans are secured by describing the object or real estate used as collateral. If collateral was not required, write “unsecured” in the text box. Most credit cards unsecured.
Section 3: Stocks and Bonds
This section is where you list all the marketable securities you and your spouse own. There is space for four, but if need be you can attach a spreadsheet with more. If you need to attach an additional spreadsheet, be sure to include your name, “as of” date and “SBA Form 413 – Section 3”.
Number of Shares – Mark the total number you own.
Name of Security – Mark the name.
Cost – Mark the initial cost of your purchase.
Market Value Quotation/Exchange – Mark the value of the security on the as-of day you selected.
Date of Quotation/Exchange – This is the day you took the value.
Total Value – Multiply the market value by the number of shares you own. This should match what you entered on page 1.
Section 4: Real Estate Owned
This section is for a detailed description of all the property you own in your name. List any property that you report on your personal taxes. Use “Property A” for your primary residence. Use sections B and C for additional properties. If you own more than three properties, attach a “schedule of real estate” that identifies the same info for all properties. If you need to attach an additional spreadsheet, be sure to include your name, “as of” date and “SBA Form 413 – Section 4”.
Type of Property: List type of property, such as “primary residence”, “undeveloped lot”, or “investment property”.
Address: Use the same address that is on your taxes.
Date of Purchase: Use the date on your mortgage bill of sale.
Original Cost: List the purchase price.
Present Market Value: Use the current appraised value of the property if sold today. You can obtain an estimate by calling a broker, or use an online tool like Trulia.com. Try to use as accurate an estimate as possible and avoid over inflating the value.
Name and Address of Mortgage Holder: Put the bank name and address. If you hold numerous mortgages from same bank, put account number as well.
Amount of Payment per Month/Year: Put your monthly/yearly mortgage payment. Write N/A if your mortgage is paid off.
Status of Mortgage: Write “current”, “In Foreclosure”, or “Paid in Full”.
Section 5: Other Personal Property and Other Assets
This section is for any personal property of significant value, such as jewelry, electronics, retirement accounts, personal assets, cars, recreational vehicles, etc. Try to provide as much information as possible, including your car model and year. If you have used any of the items as collateral for loans or have liens against them, make sure to list the name and address of the lien holder, the amount of the lien, and payment terms.
You can also use this section to detail the value of your ownership stake in your small business. You can add details that justify your valuation of your company. For more information on how to value your company, click here.
Section 6: Unpaid Taxes
List any unpaid taxes here, and specify whether they are state, federal, or local taxes.
Section 7: Other Liabilities
This section is a catch all where you can list any other liabilities not previously disclosed on the form.
Section 8: Life insurance
List all the life insurance policies you have, including term, whole life, and variable life insurance. Provide face value that would be provided to your beneficiaries, as well as the cash surrender value if you have whole life. Also list the full names of policy beneficiaries.
Once you are finished completing SBA Form 413, print it off and assemble it in a binder with all the supporting documents that verify the details on the form. When you are filling out the form, do not include anything that cannot be easily backed up with documentation. It is likely that your banker will request some of these forms in order to verify your claims, so it will speed up your loan application process if you already have them assembled and ready to go.