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 your and your spouse’s personal net worth.
Applying for an SBA loan requires a lot of paperwork. Our recommended SBA provider, SmartBiz, keeps the paperwork to a minimum, requiring only one application and then matching you to the SBA lender most likely to approve your loan. Prequalify online for up to $350K in minutes and avoid having to fill out any more complicated SBA forms.
Before you get too far, check here for free to make sure you have a credit score of 680+. If you are under 680, your chances of approval are low and you probably want to improve your score before you apply.
Who Needs to Complete SBA Form 413?
Every applicant for the SBA 7(a) general purpose business loan and SBA 504 real estate and equipment loan must complete SBA Form 413. Each of the following people must complete their own version of the form:
- Each proprietor of the business.
- Each general partner or managing member of an LLC.
- Each limited partner with 20% or more interest.
- 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 ask for further detail on the numbers you provided on this first page.
What Paperwork You’ll Need to Complete SBA Form 413
Before beginning SBA form 413, you’ll need to gather a good deal of paperwork. At the very top of the form is an “As of [date].” Your goal is get paperwork that reflects your assets and liabilities from the last full month before filling out and submitting the application. For example, if you fill out the form on August 8, 2017, you’ll want to gather documents with information going through July 31, 2017. Your as of date will be the last day of the last full month you’re providing documentation for. In our example, your as of date is July 31, 2017.
If you’re married and 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 and have joint liabilities. All joint assets and liabilities should be reported on the form, unless you have a legal document, such as a prenuptial agreement, that specifically separates certain assets.
Before you fill out the form you need to gather the following documents:
- Checking and savings account statements showing balances
- IRA, 401(k), and other retirement account statements showing balances
- Life insurance documents showing current cash value
- Stocks, bonds, and other investment documents showing current value
- Pay stub showing current annual salary
- Statements for disability income, pensions, real estate income, or other sources of income
- Mortgage statements, auto loan statements, credit card statements, and statements for other types of loans
SBA Form 413 Definitions and Terms
General Terms – Personal Financial Statement Form 413
Expiration Date: The expiration date is listed in the top right-hand side. Make sure that the form is current and has not expired. You should be able to get an up to date copy on the SBA’s Forms website.
“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 and liabilities 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 your business phone, provide a direct business line, not a secretary or general business number. For residence phone, give your cell phone. This is to enable quicker communication in case the SBA or the lender has questions about your application.
Assets – Personal Financial Statement Form 413
Cash on Hand & in Banks: Provide the total amount of money in all your personal checking accounts, including individual checking accounts, joint checking accounts, and your spouse’s checking accounts (if you’re married and file a joint tax return with your spouse).
Savings Accounts: Provide the total amount in your savings accounts, money market accounts, and CDs.
IRA and Other Retirement Accounts: Provide the total value of your Roth IRA, traditional IRA, 401(k) account, and other retirement accounts. Make sure to include the value of any retirement accounts from previous jobs that you may have forgotten to roll over into your current retirement accounts.
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 whole 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 securities owned by you, your spouse, and jointly. You will provide a full description of these securities in Section 3 on the second page of this form.
Real Estate: List the value of all residences and commercial property that you own, your spouse owns, or you jointly own together. You will provide a full description of these properties in Section 4 on the 2nd page of this form.
Automobiles: This section includes the present value of all of the cars, boats, and recreational vehicles you own (not the amount you paid for it). For cars, you can use the Kelley Blue Book for a quick estimate of the present value. 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, 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 any other personal property that you have not listed so far, including the net worth of your ownership stake in any businesses. There are many ways to value a company, which you can learn more about in our guide to small business valuation.
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 multiply this total net worth by your ownership stake. For example, if you own 25% of a business with a market value of $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, and that’s what you would write down on SBA Form 413.
Total Assets: Here you add up the total of all your assets.
Liabilities – Personal Financial Statement Form 413
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, personal loans, and personal lines of credit. We recommend that you get a credit report to make sure that you do not miss anything — you are entitled to one free copy of your credit report every year from each of the three main consumer credit bureaus.
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. This applies only to whole life insurance policies, not to term life insurance.
Mortgages on Real Estate: Put the total amount you owe on all your personal mortgages. Do not put the original amount of the mortgage, only the current outstanding debt.
Unpaid Taxes: Include any unpaid real estate, income, school, or other 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: You can arrive at your net worth by calculating your total assets minus your total liabilities.
Total: Add you total liabilities to your total net worth.
How to Fill Out SBA Form 413 in 8 Steps
Step 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 mentioned above.
Net Investment Income: This section includes any income from dividends and interest earned on 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, a pension, or other income. Describe this income in the box provided beneath Section 1.
As Endorser or Co-Maker: List the total outstanding debt on any loans you’ve cosigned.
Legal Claims & Judgments: List any debts associated with legal judgments and 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.
Step 2: Notes Payable to Banks and Others
This section details all of your debts, such as credit cards, personal loans, and student loans. If you do not have enough space, attach another sheet of paper with the required information. If you need to attach an additional sheet, be sure to write your name, “as of” date, and “SBA Form 413 – Section 2” at the top left corner.
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 the last four numbers of 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. Put $0 for credit cards if you pay your balance in full each month and don’t retain a balance.
Payment Amount: Put the minimum payment that you have to pay with each statement. For credit cards, you can write “varies.”
Frequency: Note the payment 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 are unsecured.
Step 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 an additional sheet with more. If you need to attach an additional sheet, be sure to write your name, “as of” date, and “SBA Form 413 – Section 3” at the top.
Number of Shares: Mark the total number you own.
Name of Security: Note the name.
Cost: Put the initial cost of your purchase.
Market Value Quotation/Exchange: Put the value of the security on the as-of date you selected.
Date of Quotation/Exchange: This is the day you took the value (the same as the as-of date).
Total Value: Multiply the market value by the number of shares you own. This should match what you entered on page 1 of the form under “Assets,” “Stocks and Bonds.”
Step 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. Property A should be your primary residence, if you own it. 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 information for all owned properties. If you need to attach an additional sheet, 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 you list for this property on your personal tax return.
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 Zillow or Trulia. Try to use as accurate an estimate as possible and avoid over inflating the value.
Name and Address of Mortgage Holder: Put the name and address of the bank you owe money to. If you hold numerous mortgages from the same bank, put the last four digits of the 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,” “foreclosure,” or “paid in full.”
Step 5: Other Personal Property and Other Assets
This section is for any personal property of significant value, such as jewelry, electronics, retirement accounts, 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 (e.g. payment amount and frequency). You can also use this section to detail the value of your ownership stake in your small business.
You won’t have to show documentation on the value of your business right away. However, you should be prepared to provide it in the event your loan provider asks for it. You can pay a consultant to provide an official business valuation, or you can estimate the value of your business and document how you made your calculation.
Step 6: Unpaid Taxes
If you owe taxes to the federal government, then you can’t be approved for an SBA loan, until that debt is resolved. The rule is less clear if taxes are owed on the state or local levels. Owning money from one of these authorities may not prohibit you from borrowing through the SBA program. Local tax debts, such as property taxes, are more common and much less likely to stop you from being approved than state tax debts.
All tax debts, regardless of what level they’re at, need to be properly documented and disclosed in this section. If you’re not accurate with what tax obligation debts you have, then it could impact your chances at being approved, even if they’re local tax debts.
Step 7: Other Liabilities
This section is a catch all where you can list any other liabilities not previously disclosed on the form. Any liability that doesn’t have a specific place on the form, or is ambiguous, should be written into this section. Some examples of the types of liabilities that can be found here are:
- Debts to Foreign Governments: Any debts owed to foreign governments, typically taxes, are typically disclosed here even though they are a tax obligation. This is because they’re not a tax obligation within the United States, which is what the unpaid taxes section is looking for.
- Debts That Come From Private Agreements: If you made an agreement with someone without any documentation, that could cause you a significant amount of money, then you should list it here.
- Outstanding Lawsuits: If you’re currently being sued, but a judgment hasn’t been entered, then you should list your potential liability in this section. You wouldn’t need to list any potential lawsuits unless you’re confident there will be future liability for past activity.
You don’t want to miss any liabilities, because your loan provider will likely find them, and they could think you’re trying to hide something. If you’re not sure where to put a liability on the form, then make sure it’s included in this section.
Step 8: Life Insurance Held
While you may have already included a cash benefit life insurance policy as an asset earlier in the form, you need to include all life insurance you currently hold, on your own life, in this section. This includes life insurance written down as an asset, but not life insurance payment you may be making for someone else, which is a liability. List all the life insurance policies you have, including term, whole life, and variable life insurance.
Make sure you provide the face value (death benefit) of your policy that would be provided to your beneficiaries if you die, as well as the cash surrender value if you have whole life of variable life. Also list the full names of all policy beneficiaries, and don’t forget the name of the insurance company you have your insurance through (which is not the broker you may have worked with).
Once you complete step 8 then you’re done with your SBA Form 413! If you’re ready to move forward, you can submit an SBA loan application with SmartBiz, our preferred SBA lender for loans under $350K for working capital, or up to $5 million for commercial real estate. They will cut down the amount of time you’ll spend on your SBA loan paperwork, and can help you get funded in as little as 30 days.
SBA Form 413 FAQs
Here are some of the most commonly asked questions about SBA form 413, and their answers:
Do I Have to Include My Spouse on the Form?
If you file a joint tax return, you must include your spouse on the SBA form 413. If this is the case, you should include your spouse’s assets, liabilities, and income throughout the form because you may share these with your spouse.
Can I Exclude Any Assets From the Form?
While you can exclude assets, it’s generally not recommended. You want to put forth the best application possible, and the more assets you have the better your application will look. Not including them on the form won’t mean that those assets can’t be used to fulfill your personal guarantee in the event of a default. However, not including assets that are easily found in your background check could also hurt your relationship with your loan provider.
Do I Include All of My Life Insurance as an Asset?
You only have to include certain types of life insurance policies that involve a cash payout upon cancellation. Otherwise, it’s not an asset that can be cashed out in the event of a default, so it’s not relevant to your borrowing. All life insurance will be listed in the life insurance section.
How Do I Determine the Value of My “Other Personal Property”?
Your possessions that don’t have a specific spot on the form are included in the other personal property section. The value is an estimation based off of what you could get for those possessions if you had a fire sale in your yard tomorrow, and sold everything. This is not meant to be an exact value, but is an estimated placeholder, and you shouldn’t purposely undersell or oversell the value.
What Do I Include for “State of Mortgage” For Section 4, Real Estate Owned?
You should write “current” if you’re currently up to date with all payments, “In Foreclosure” if the mortgage company is in the process of taking the property for non-payment, or “paid in full” if you’ve paid off a mortgage. Typically a “paid in full” would be needed if the mortgage is still showing up on your credit report, even though you’ve made all necessary payments.
Do I Have to Include Outstanding Lawsuits if There Has Not Been a Judgment Against Me?
It’s in your best interest to be as upfront and honest about every potential liability. If you’re in the middle of a lawsuit, you should include any potential liability in the “Other Liabilities” section. Make sure you note that it’s still a potential liability and not a judgment. You should also make sure you communicate this to your loan provider directly. If someone has threatened a lawsuit, but not filed anything, then there is no need to disclose that until something has been filed.
When Do I Provide Documentation for All Claims on the Form?
The SBA Form 413 is for declarations of your personal financial situation. You don’t need to include proof or documentation with it when you apply. However, your loan provider will follow up with you and ask for the documentation they need to approve your application during their due diligence stage. When you submit your SBA form 413, you should be prepared to provide the documentation to backup your claims at any time.
Once you’re finished completing SBA Form 413, sign and date the last page, print it off, and assemble it in a binder with all the supporting documents that verify the details on the form. When you’re filling out the form, don’t 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. Whenever possible, provide copies of documents instead of the originals.
If you want to minimize your SBA paperwork, you can also try our recommended SBA provider, SmartBiz, for loans under $350K. Take 5 minutes, fill out one online application, and get matched with the SBA lender most likely to approve your loan. Avoid the hassle of filling out any more forms and get funded in as little as 30 days.
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