SBA Form 413: How to Complete It
Lenders require a personal financial statement to evaluate your 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.
What You Need to Know about SBA Form 413:
Who Needs to Complete Form 413?
- 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 show you have joint assets and liabilities. However, your spouse isn’t considered a guarantor on the loan.
How to Fill out Form 413
SBA Form 413 includes 11 sections for 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:
1. Sources of Income
This section includes your current salary, annual net investment income, real estate income, and any other sources of income such as pensions.
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 name and address of the note-holder, original balance, current balance, payment amount, frequency of payments, and how the note is secured or endorsed.
3. Stocks and Bonds
For each security you 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.
5. Other Personal Property and Other Assets
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
Other liabilities may include co-signed or guaranteed obligations, debts to foreign governments, or outstanding lawsuits, among other examples.
8. Life Insurance Held
Here, 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. 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 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.
Conclusion: Don’t Take Any Shortcuts When Submitting Form 413
You don’t want to include anything in Form 413 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. 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.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.