SBA Loan Application Process

The SBA loan application process is often intense and requires the borrower to be thorough and complete with what is required from them by the funding SBA bank.  One of the most important points for prospective applicants is to accept this and be ready mentally to provide the requested items. 

For small business owners it is normally ideal if they have a book keeper, accountant or CFO to handle the bulk of the details for them.  People trained in these fields are use to having to provide this kind of information.  Bulking at the requirements will only result in wasted time as the borrower will never get the bank to reduce the required items. 

SBA loan Application

Here is an overview of the needed items that you will most likely have to provide: 

• Resumes on all borrowers with 20% or more ownership
• 3 years of business tax returns
• 3 years of personal tax returns on all borrowers with 20% or more business ownership
• 3 years of real estate entities, if applicable
• Personal financial statement on all borrowers with 20% or more
• Business debt schedule
• Accounts receivable and accounts payable statements, Ageing
• Year to date profit & loss and balance sheet on the business
• Copy of the purchase agreement, if applicable
• Pictures of subject property – 5 or more   
• Loan forms completed that are provided by the bank/lender

On properties where a portion of the space is leased, you need to provide (cannot be more than 49% leased out):

• Current rent roll
• Copy of all leases

These are the hard documents that are required by all lenders and banks that fund SBA guaranteed loans.  Keep in mind, additional documentation maybe required.  For example, if the borrower has a 20% or more ownership in other business(s), three years of tax returns and year to date financials will also be required on all entities. 

Upon delivering all of these items, commonly referred to as the “package” the loan officer has enough information to do an initial underwriting of the file.  Assuming he believe the file is credit worthy and fits the banks appetite for lending, they typically will issue a term sheet or letter of interest that spells out the proposed loan terms. 

You as the borrower then have the opportunity to accept or decline the proposal.  Most of the time the bank would require you to sign the term sheet and send in a good faith deposit, assuming you accept it.  It normally ranges from $2,000 - $5,000 depending on the size and complexity of the loan request.  At this point the file is officially in process. 

For business owners looking for finance options, it’s critical to keep in mind that not all SBA lenders are the same.  There is still a wide degree of what one bank will fund to another.  Most of the loans we close, for example have been declined by 3 -5 other banks.  Also, many banks have their own problems and are not in a position to lend.   Don’t get discouraged, figure out how to get it done.