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November 29, 2021

SBA Form 413: How to Complete the Personal Finance Statement

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Fora Financial

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The SBA requires applicants to provide a personal financial statement in order to evaluate their credit history and ability to repay debt. Although completing multiple forms can be tedious, it’s important to pay careful attention to SBA Form 413 as it can impact your business’s ability to secure financing. In this blog post, we'll detail how to complete this form so that you can increase your chances of getting approved for an SBA loan.

What You Need to Know about SBA Form 413:

Who Needs to Complete SBA Form 413?

Any business owner applying for an SBA 7(a) loan or SBA 504 loan must fill out SBA Form 413, which includes:
  • The sole proprietor of the business
  • Each general partner of a partnership
  • All managing members of an LLC
  • Every owner with 20 percent or more equity interest in the business (spouses that individually hold equity in a business are counted together to determine the 20 percent threshold)
  • Any person or entity providing a guarantee on the loan
If you’re married and file a joint tax return with your spouse, your spouse must be included on the form to prove that you have joint assets and liabilities. However, your spouse isn’t considered a guarantor on the SBA loan. New call-to-action

Documents to Compile Before Completing the Form

Because SBA Form 413 can be tedious to complete and requires considerable information, you should take time to compile the following documents:
  • Checking and savings account statements
  • Life insurance documents
  • Pay stubs
  • Stocks, bonds, and other investment documents
  • Retirement account statements
  • Other financial statements that prove additional forms of income

How to Complete SBA Form 413

SBA Form 413 includes 11 sections for business loan applicants to complete. The final three sections of the form summarize the information you’re asked to provide in the preceding eight sections. Here’s a brief overview of what you’ll need to report on this form in order to qualify for financing:

1. Sources of Income

In this section, you'll be asked to detail the following information about your business and personal sources of income:
  • Your current salary
  • Annual net investment income
  • Real estate income
  • Any other sources of income such as pensions or child support

2. Notes Payable to Banks and Others

Notes payable include credit cards, personal loans, and installment loans. For each note held, you’ll have to list the following information:
  • Name and address of the note-holder
  • Original balance
  • Current balance
  • Payment amount
  • Frequency of payments
  • How the note is secured or endorsed
Before completing this section, we recommend checking your personal and business credit reports to ensure that you don't miss anything.

3. Stocks and Bonds

For each security you or your spouse own, you’ll be asked to report the security name, number of shares owned, cost basis, and market value as of the date you select.

4. Real Estate Owned

In this section, you’ll need to include each type of property you own, the address, date of purchase and original cost, present market value, and any relevant mortgage information. If the property is reported on your personal tax return, it should be included in this section.

5. Other Personal Assets and Property

Here, you’ll list property such as jewelry, IRAs or other retirement accounts, cars, and recreational vehicles. For all vehicles you own, you can obtain an estimated value by using an online tool such as Kelley Blue Book.

6. Unpaid Taxes

You’ll need to report any unpaid taxes on Form 413. Unpaid tax debt stays on your credit report for seven years. You must be current on all federal, state, and local taxes before the SBA will make you a loan.

7. Other Liabilities

The SBA lender will want to be aware of any liabilities you have as a borrower. Other liabilities may include co-signed or guaranteed obligations, debts to foreign governments, or outstanding lawsuits, among other examples.

8. Life Insurance Held

In this section of the form, you’ll list any life insurance policies held by you or your spouse, as well as the death benefit and cash surrender value for each.

Documents Needed for SBA Form 413

Numerous supporting documents are needed to verify the information you provide in SBA Form 413. This documentation typically includes:
  • Bank account statements
  • IRA, 401(k), and other retirement account statements
  • Life insurance statements showing current cash value
  • Investment documents showing current value
  • Pay stub
  • Statements for other income
  • Loan statements (such as mortgages, credit cards, and auto loans)
While you’re not usually required to submit this paperwork with your loan application, the SBA lender will likely ask for it as they conduct their due diligence and determine your creditworthiness.

How to Submit Form 413

Once you’ve completed the form, sign and date page three and submit it to your lender. It’s essential that you don’t leave out any relevant information — especially under liabilities. If a lender finds a debt that you failed to list on Form 413, they might think you’re trying to hide information and reject your application. It's crucial that you're honest and forthcoming when completing this form. If you aren't, the SBA will likely disqualify your application.

Conclusion: Don’t Take Any Shortcuts When Submitting Form 413

When completing SBA Form 413, you shouldn't include information that you can’t back up with supporting documentation. Although you don’t need to provide documentation until the due diligence stage, it’s helpful to assemble it prior to submitting your application to ensure it’s all there when the lender asks for it. Completing Form 413 can be challenging, not to mention time-consuming. However, it also provides an opportunity to put your best foot forward when applying for an SBA loan. Take your time and ask your lender or local SBA office for help if you need it. Editor’s Note: This post was updated for accuracy and comprehensiveness in December 2021.