SBA Personal Financial Statement: How to Fill out SBA Form 413

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When applying for certain SBA-guaranteed loans, you fill out U.S. Small Business Administration Form 413, the Personal Financial Statement. Despite being two pages long, Form 413 will probably require a few hours of your time to locate supporting documents and complete all eight sections.

What is SBA Form 413?

SBA Form 413 collects important financial information related to you and your business. The first page addresses your assets, liabilities, sources of income, and details regarding debt and credit. The second page deals with your ownership of stocks, bonds, real estate, other personal property, unpaid taxes, other liabilities, and life insurance held. The form ends with signature blocks.

When Form 413 is required, the following individuals must each fill out their own versions:

  • Proprietors.
  • Manager members and general partners of a limited liability company.
  • Limited partners with at least a 20% interest in a partnership.
  • Stockholders holding at least 20% of a corporation’s voting stock.
  • Guarantors of the loan.

Form 413 is used when applying for either of two loan programs:

  • SBA 504: The business owner must put down 10% of the property value, with a non-profit Certified Development Company contributing 40% and the lender providing 50%. SBA 504 10- or 20-year loans are available for up to $5 million to eligible businesses that occupy at least 51% of the underlying commercial property.
  • SBA 7(a): This program guarantees up to $5 million in private-lender loans at below-market interest rates for companies to purchase commercial property, expand an existing business, or purchase assets. These loans have terms ranging from five to 25 years.

The SBA utilizes the information you provide on Form 413 to evaluate your ability to repay your guaranteed loan and to determine the amount of collateral you’ll have to pledge. The assets, liabilities and income you report help SBA determine your debt service coverage ratio. This divides the net operating income—all revenue minus all reasonably necessary operating expenses—by annual debt service—i.e., payments of principal and interest for the year. Ratios below 1.25 can be problematic. The information on Form 413 helps SBA decide how large a loan to guarantee, as well as other terms. The form is also used to enforce eligibility requirements. For example, eligible small businesses:

  • Cannot exceed $5 million in net operating income.
  • Cannot exceed $15 million in tangible net worth.
  • New businesses must have at least $1 in cash or in business assets for every $3 of loans.
  • Established businesses must, after the loan, have no more than $4 of debt for every $1 of net worth.

What Documents Do You Need?

You’ll have to gather considerable information to complete Form 413. Furthermore, the lender will require photocopies of original documentation for many items, such as mortgages and loans. To speed up the process, gather the documents up front.

Assets

Information on your assets—account holder name(s), account types, account numbers, and balances—will require:

  • Checking and savings account statements. Include spouse’s accounts if you file jointly. Savings accounts include personal savings, money markets and CDs.
  • IRA, 401(k) and all other retirement account statements.
  • Copies of any loan agreements and promissory notes on money you have lent to others—accounts and notes receivable.
  • Life insurance policies on your own life, payable to your beneficiaries.
  • Brokerage and mutual fund statements showing your securities holdings -- stocks, bonds and other securities held by you (and your spouse if joint filer).
  • Savings bond statements.
  • Balance sheet and income statement.
  • Real estate holdings, including deeds, insurance policies and current fair market values. Include all residences and commercial properties owned.
  • Present value for your automobiles, recreational vehicles, motorcycles etc., along with title/registration information. You can use Kelly Blue Book to get present values of automobiles.
  • Estimated values of other personal property, including artwork, jewelry, antiques, etc. Use realistic current values.
  • Other assets, such as boats, airplanes, etc.
  • Other businesses owned, including financial statements.

Liabilities

Gather up the following documents related to your personal and business’ liabilities:

  • Accounts payable, listing products and services purchased on credit. This is for your business only, and does not require personal lines of credit or credit cards.
  • Notes payable—money owed—to banks and other lenders. Covers credit card balances, personal lines of credit and personal loans. Include current balances, payment frequency and amount, the identity of the note holder and a description of any collateral. Verify that you’ve included all debt by referencing a recent credit report from Equifax, TransUnion or Experian.
  • Loan and lease installment account statements for automobiles (also boats, airplanes, etc.), including total monthly payment and outstanding balances.
  • Other installment accounts with terms extending longer than one year (i.e., student loans, personal loans).
  • Life insurance loan balances.
  • Mortgage and home equity line of credit balances.
  • Statement of taxes owed, if any, including taxes on income and property.
  • Any other liabilities.

Step-by-Step Instructions

Begin by entering the as-of-date on which the information is based, which is generally the last day of the previous month. You want to get paperwork for your assets and liabilities up to that point in time. For example, if you're completing the form on April 4th, then you'd want to get documents up to March 31st. Then enter your name—and your spouse’s name if you file a joint return—your address, the legal name of the business applying for an SBA loan, and your phone number(s).

Assets and Liabilities

Refer to the above list of required documents to help you fill out the top of page one, where you list your Assets and Liabilities. Enter the total amount for each requested item, omitting cents, and then calculate and enter totals. Additional details may be required, which can be provided in the indicated sections further down on the form. For example, you can describe real estate holdings in Section 4, and unpaid taxes in Section 6. Also, note that you can append extra sheets of paper if necessary to specify section details. If you do this, make sure to identify each attachment as part of a particular section.

Section 1. Income Sources and Contingent Liabilities

This section collects data regarding your annual income and any contingent liabilities—money that you might owe under certain circumstances.

Sources of Income: Enter information for the last full tax year. Be sure to include your spouse’s income if you file jointly. The items to enter are:

  • Annual salary, wages, commissions, and other earnings as reported on Form 1099 and W-2. Include income received from a limited liability company and S corporation.
  • Net investment income for the tax year (include realized capital gains, interest and dividends).
  • Real estate earnings for the tax year, including rental income and money earned on the sale of real estate holdings.
  • Other income for the tax year (including SSA payments, VA disability payments, retirement account distributions, betting income, etc.). You need not include alimony and child support. Describe every “other income” item in the spaces provided immediately following.

Contingent Liabilities: Enter the following:

  • Any balances on credit account and loans for which you have acted as a co-signer or guarantor
  • Any money you might owe from legal claims and judgments.
  • Money set aside to pay anticipated income tax.
  • Other special debt, which is a catch-all to cover money you might owe in the future.

Section 2. Notes Payable to Banks and Others

For each item included in the “Notes Payable to Banks and Others” line of the Liabilities section—credit card debt, personal loans and lines of credit, cash advances, student loans, car loans, payday loans, etc.—enter the name and address of the creditor, lender, or noteholder, as well as the original balance—$0 for credit cards—current balance, payment amount—you can enter “varies” for credit cards—payment frequency, and if applicable, how the loan is secured (i.e., what is being used as collateral). Personal loans and credit card debts are generally not secured, so write “unsecured” in the collateral column for these. Exclude real estate debt, which goes in Section 4.

Section 3. Stocks and Bonds

For each separate holding, enter the number of shares or units, the security name, the original cost per share—the weighted average of purchase prices—recent price quote, date of recent price quote, and the total value of the holding. If you have multiple purchases and/or sales of a holding, check with your broker for the average cost per share, also known as the “share cost basis”.

Section 4. Real Estate Owned

For each property you own and list on your personal taxes, enter the type—primary residence, investment property, undeveloped land, etc.—address, date of purchase, original cost and the present market value—on the as-of date. Also, if applicable, enter the mortgage holder’s name and address, the account number, balance owed, payments per month or year, and the status of the mortgage—current, paid in full, default, etc. Use Column A for your primary residence.

Section 5. Other Personal Property and Other Assets

Describe each item you included in “Other Personal Property” of the Assets section. This includes cars, jewelry, retirement accounts, your ownership stake in your business, and other assets. For any asset that is pledged as collateral—such as a car being financed—include the name and address of the lien holder, the lien amount, payment frequency, and amount.

Section 6. Unpaid Taxes

List any unpaid taxes, including to whom they're owed, the amount owed, payment terms and a description of any collateral.

Section 7. Other Liabilities

List and describe miscellaneous debt, including money you owe to foreign governments, money borrowed from private parties without formal documentation, and any money you expect to pay for legal proceedings. It’s a catch-all section to ensure you disclose all liabilities.

Section 8. Life Insurance Held

Include any cash-balance life insurance included in “Life Insurance-Cash Surrender Value Only” in the Assets section. Enter all other life insurance policies, including term, variable annuity, and whole life insurance you hold on your own life. Include the death benefit and cash surrender value—if any—of each policy, as well as the names of the insurance companies and the beneficiaries.

You’re almost done! Sign and date the form, enter your Social Security Number, and submit the form to the SBA loan provider or loan broker, along with your SBA loan application. You’ll probably be asked for copies of the documents we discussed earlier, depending on the lender’s procedures. The SBA has published several guides to help you fill out other forms that you might need to complete in order to obtain your loan.

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