Small Business Administration (SBA) loans are some of the most popular options for small business owners, thanks largely to their lengthy repayment terms and lower interest rates. The SBA guarantees part of these traditional loans with government funds to reduce the risks to lenders.
One of the most important pieces of documentation to have when applying for an SBA loan is SBA Form 413. The form is required by the SBA, but it gets reviewed by the lender you choose. Learn more about how to fill out this form as you seek the additional funding that you need.
What is SBA Form 413?
SBA Form 413 is a personal financial statement that provides lenders with an overview of your current financial situation, allowing them to analyze your assets and liabilities. Understanding your current financial standing helps lenders determine how likely you are to repay the loan.
Accuracy is crucial when filling out Form 413. You’re legally required to include credit card debt, outstanding loans, and contingent liabilities. Lenders will likely verify bank balances, property valuations, and any other assets, so it’s important to be honest about what you own.
How to fill out SBA Form 413
1. Provide basic business information
The basic information section is the most straightforward. You’ll only need to provide your personal contact information, including your name, the name of your business, your home address, and your phone number.
Additionally, you’ll need to fill in the “as of” section with the date up to which your financial information is accurate. If you don’t know, just put the final calendar day of the month in which you’re applying. Out-of-date information can interfere with the lender's valuation of your financials and may lead to your loan application being rejected.
2. Report your assets
After filling out your basic information, you will detail your assets and their amounts. You can round each amount to the nearest dollar. It is crucial to avoid inflating the value of non-cash assets. The items you will need to include in this section are the following:
- Cash on hand and in banks. Enter the total of all the money in your and your spouse’s checking accounts.
- Savings accounts. Enter the total of all the money in your and your spouse’s savings accounts. Be sure to include the money you have in money market accounts and certificates of deposit (CDs).
- Retirement accounts. Enter the total of all the money in you and your spouse’s retirement accounts, including IRAs.
- Accounts and notes receivable. You likely only need to fill in this information if you’ve personally loaned money to a third party. This section accounts for the money that these third parties still owe you.
- Life insurance—cash surrender value only. Enter the amount of money you’d receive if you cancel a life insurance policy that includes a payout. You only need to complete this section if you’ve taken out whole life insurance policies rather than term life insurance policies. Note what you include here for section eight of your form.
- Stocks and bonds. Enter the current value of all stocks and bonds that you and your spouse own.
- Real estate. Enter the total current market value of all commercial or residential properties you and your spouse own. Note what you include here for section four of your form.
- Automobile. Enter the total current market value of all vehicles you and your spouse own. Include boats and planes alongside cars if you own those. Do not list any vehicles that you lease.
- Other personal property. Enter the total price of all the other valuable material items you own and could sell for cash. Common examples include furniture, jewelry, electronics, and antiques. You’ll need this information again in section five of the form.
- Other assets. Enter the approximate value of all your other assets. In this context, assets include your interest or equity in your business. You’re best off obtaining this number through a professional valuation. You’ll also need it again in section five.
- Total assets. Add up the total amount of everything above and then enter it on the line.
3. Report your liabilities
In this section, you list your liabilities. You should typically round your liability values up to the nearest dollar. Here is the information you will need to provide:
- Accounts payable. This section covers any money you owe to third parties that aren’t banks.
- Notes payable to banks and others. Here you will enter all of the outstanding balances on your personal credit cards, business loans, and business lines of credit. You will need this information again in section two of the form.
- Automobile installment account. Describe your total and monthly payments for any car loans.
- Other installment accounts. Enter the total and monthly payment amount of any other monthly-payment loans you currently owe. This section includes student and personal loans.
- Loan against life insurance. Enter the balance of any current loans for which your whole life insurance policy is collateral.
- Mortgages on real estate. Enter the amount of money you still owe on your real estate mortgages. You'll detail this information further in section four of the form.
- Unpaid taxes. Enter the amount of taxes you have yet to pay since the most recent tax return you filed. You will come back to this information in section six.
- Other liabilities. Enter the total amount of all your other debts.
- Total liabilities. Add all the above liabilities and enter the sum here.
- Net worth. Your net worth is the difference between your net assets and net liabilities.
- Total. Add the above two lines. This value must be the same as your total assets.
4. List your sources of income and contingent liabilities
Detail you and your spouse’s income sources and contingent liabilities. A contingent liability is a debt that is owed only under certain conditions.
The Form 413 income sources section will ask for the following:
- Salary. Enter the total annual salaries for you and your spouse. Use the amount from your most recent tax returns.
- Net investment income. Enter the amount of income you’ve earned from investment dividends or interest.
- Real estate income. This figure is the net income you earn from owning real estate. An example could be the income you earn as a landlord for a housing unit. Note that real estate income refers to the amount that remains after your expenses.
- Other income. Enter the amount of income you earn from any other sources. That might include child support, alimony, pension, and government benefits.
The contingent liabilities section includes:
- Endorsement or co-making. Enter the total amount of the debts on which you or your spouse is a guarantor or co-signer, agreeing to repay someone else’s debts if they can’t.
- Legal claims and judgments. Post the total sum you could wind up owing based on pending legal claims or judgments.
- Provisions for federal income tax. Disclose the amount of money you’re reserving to cover federal taxes that result from future income increases after litigation or asset sales.
- Other special debt. Write the total amount of all your other contingent debts.
5. Detail your notes payable to banks and others in section 2
Section 2 is where you go into additional detail about your notes payable. Although SBA Form 413 includes a table where you can get into these details, if you need more space, you may include an additional sheet. You’ll want to take good care to include the following for each note payable:
- Name and address of the noteholder. This is the name and address of the person or institution to which you owe money.
- Original balance. List how much you owed when you first took out the payable note. Write $0 for credit cards and lines of credit, and enter your total loan amount for any installment loans you are still repaying.
- Current balance. This figure is the amount you currently owe.
- Payment amount. This figure is the amount you pay per month for each debt. For a credit card or line of credit, you can write “varies.”
- Frequency. State whether you pay your loan debts daily, monthly, weekly, or on some other repayment schedule.
- How secured or endorsed/type of collateral. Detail the collateral you used to secure your loan. If you didn’t need collateral, simply write “unsecured.”
6. Detail the status of your stocks and bonds in section 3
In section 3, you’ll elaborate on your and your spouse’s stocks and bonds. Again, you may add additional sheets if necessary to provide a full report. Some specific information you’ll provide is:
- Number of shares. The total of your and your spouse’s shares of the security in question.
- Name of securities. The name of the stock, bond, or option in question.
- Cost. The original cost of the security.
- Market value quotation/exchange. The security’s current market value.
- Date of quotation/exchange. The date corresponding to this market value.
- Total value. The product of how many shares you (and your spouse) own and their current value.
7. Complete section 4 with real estate details
In section 4, you’ll go into detail about the real estate you own. You’ll likely need to add this information:
- Type of real estate. Enter details about your primary residence, any investment properties, or undeveloped lots you may own.
- Address. Write the address of each property.
- Date purchased. The date you acquired a mortgage is typically listed in your mortgage documentation.
- Original cost. The market cost of the property.
- Present market value. The current market value of the property. A professional evaluation of the property can help you determine this value more accurately.
- Name and address of mortgage holder. Details about the bank that holds your housing loan.
- Mortgage account number. You can find his number on your mortgage statement.
- Mortgage balance. The remaining balance of your mortgage.
- Amount of payment per month or year. The total amount of your monthly or yearly mortgage bill. If your mortgage is paid off, write N/A here instead.
- Status of mortgage. List the status of your mortgage as either “current,” “foreclosed,” or “paid in full.”
8. Fill out sections 5 through 8
Sections 5 through 8 differ from the previous sections in that they require long-form descriptions. You will provide written information about your personal property, unpaid taxes, other liabilities, and life insurance.
- Section 5: Personal property
List and summarize the various personal items you valued in the previous sections in as much detail as possible, and provide documentation that proves their value. If there’s no documentation readily available, you may estimate, but don’t intentionally undervalue or overvalue anything.
- Section 6: Unpaid taxes
In this section, you’ll add more details about the unpaid taxes you listed in the liabilities section. You should explain the amount of taxes you owe and when they’re due, and indicate any assets on which a tax lien exists.
- Section 7: Other liabilities
Explain the items you listed as “other liabilities” earlier. You should typically state the type of debt and the person or entity to whom you owe it. You should also state how much you owe and detail your repayment schedule.
- Section 8: Life insurance
This is the final section of SBA Form 413. Here, describe your life insurance policies and their cash surrender value and death benefit. You’ll want to indicate each plan’s carrier and the names of your beneficiaries.
9. Review the completed form
After completing all the previous sections, go over them all to make sure it’s accurate. False or misleading statements on the document may cause your application to be rejected or, if made knowingly, lead to criminal repercussions.
10. Sign and date
You and your spouse must sign and date SBA Form 413 and provide your Social Security numbers.
Documents to gather ahead of time
Because SBA Form 413 requires so much financial information, it’s important to have the relevant documentation on hand to help expedite the process, such as the following.
Personal checking and savings bank statements
Personal checking and savings account statements can give the SBA a solid sense of how much you’re spending and earning.
Retirement account statements
Statements from your IRA accounts may reinforce the asset amounts you included on your form.
Life insurance policy documents
A life insurance policy document details the policyholder, benefits, terms and conditions, and monthly payments. This information is important for several parts of SBA Form 413.
Documents concerning your stocks and bonds
These documents show the status of your personal investments, the company whose bonds or stocks you own, and their value. They confirm your stocks and bonds information.
Pay stubs showing your annual salary
Your annual income may be a factor in determining whether or not you’re eligible for an SBA loan. It helps the lender ascertain whether you can feasibly repay the debt within the loan term.
Documents showing any additional income information
You may have multiple streams of income. Having all your income information organized and in one place helps you document it accurately and efficiently. It also helps the SBA verify the information.
General market data about your personally owned property
It’s rare for someone to know the market values of their homes, cars, and other properties off the top of their head. Having documentation or prior research available may help make Form 413 easier to complete and give the SBA the verification materials it needs.
Documentation of any held debts
Credit cards, mortgages, and other personal debts are part of your overall net worth. The end total helps determine your eligibility for SBA loans.
Apply for an SBA loan from SmartBiz Bank®
SBA loans are incredibly popular options for small business owners. Find out if you pre-qualify for an SBA loan from SmartBiz Bank® today.
FAQs
What is SBA Form 413 used for?
SBA Form 413 is typically used to evaluate a prospective borrower’s personal financial position when applying for certain SBA loans. Lenders use the form to assess your net worth, liquidity, and overall financial stability. It helps determine your ability to support and repay a business loan if needed.
What information is required on a personal financial statement?
A personal financial statement requires detailed information about your assets, liabilities, income, and contingent liabilities. This includes items such as cash, investments, real estate, loans, credit accounts, and any other financial obligations. You will also need to disclose sources of income and provide supporting details where applicable. Accuracy and completeness are important as lenders may rely on this information during the approval process.
How do you list assets and liabilities on SBA Form 413?
Assets and liabilities should be listed clearly and categorized according to the sections provided in the form. Assets typically include cash accounts, securities, real estate, and personal property while liabilities include mortgages, loans, and other debts. Each entry should typically reflect current values and outstanding balances as accurately as possible. Supporting documentation may be required to verify these amounts.
Do you need to include your spouse’s financial information?
You will likely need to include your spouse’s financial information. This is because lenders may consider the full financial picture of the household when assessing risk. However, requirements may vary depending on the lender and the loan structure. It is important to review the specific instructions provided with the form.
What documents should you have ready before filling out the form?
Before completing SBA Form 413, it is helpful to gather documents such as bank statements, investment account summaries, real estate valuations, and loan statements. You may also need records of income, including pay stubs or tax returns. Having these documents readily available may help improve accuracy and reduce the likelihood of errors. Preparation can also help speed up the application process.
What are common mistakes to avoid when completing SBA Form 413?
Common mistakes include providing incomplete information, using outdated financial data, and misreporting asset values or liabilities. Some applicants also overlook contingent liabilities, such as guarantees or pending obligations. Inconsistencies between the form and supporting documents can raise concerns. Taking time to review your entries carefully may help ensure a more accurate and reliable submission.
