Securing funding is one of the most critical hurdles for business owners, and an SBA loan is often the best option for small business owners seeking favorable terms. However, with only about 15-20% of SBA loan applications approved, it’s essential to prepare thoroughly and understand the documentation required to maximize success.

This guide provides a comprehensive checklist of all the documents needed for an SBA loan application, industry insights, and how the impact of COVID-19 has changed the loan process. Whether you’re applying for the first time or looking to refine your approach, this checklist will set you up for success.

What Makes SBA Loans Stand Out?

The U.S. Small Business Administration backs SBA loans, which allows participating banks, credit unions, and other lenders to offer small business owners better terms compared to standard business loans. Known for their low-interest rates and extended repayment periods, SBA loans are flexible and can be used for various purposes such as:

  • Working capital
  • Purchasing equipment or real estate
  • Renovations and leasehold improvements
  • Refinancing existing debt (in special circumstances) 

The most popular SBA loan is the 7(a) loan due to its versatility. However, these loans come with stringent requirements, especially since the COVID-19 pandemic. Understanding the loan process and having a detailed document checklist is critical for success.

Understanding the SBA Loan Process

While SBA loans offer unique benefits, they share many of the same requirements as traditional loans, including what lenders call “the 5 C’s of Credit”:

  1. Capital: Expect to make a down payment of up to 30% of the purchase price, plus adequate cash reserves. 
  2. Creditworthiness: A solid credit history and score indicate strong financial responsibility. 
  3. Capacity: The ability to repay the loan, evidenced by cash flow and consistent revenue.
  4. Collateral: Personal or business assets to secure the loan.
  5. Character: Relevant business experience showcasing your capability to run the business effectively.

COVID-19 has amplified the importance of these 5 C’s, with a heightened focus on cash reserves, collateral, and business resiliency.

Your SBA Document Checklist

Below is a complete list of documents required for an SBA loan application. Ensure you assemble these before submitting your application to avoid delays.

1. Borrower Information

  • SBA Form 1919 (Borrower Information Form): A mandatory form for detailing the owners and key decision-makers of the business. Required for all individuals with 20% or more ownership.

2. Personal Background and Financial Statements

  • SBA Form 912 (Statement of Personal History): Required only in specific cases.
  • SBA Form 413 (Personal Financial Statement): Available to demonstrate personal financial solvency.

3. Business Financial Statements

To show your financial health and repayment ability, you’ll need:

  • Profit & Loss Statements (P&L) for the last 3 years
  • Year-End Balance Sheets for the last 3 years
  • A detailed debt schedule
  • Interim Balance Sheet
  • Interim Profit & Loss Statement
  • Projected Financial Statements (including 12-month cash flow estimates)

4. Business Plans and Documentation

  • Business Certificate/License: Submit your original license or certificate of doing business. 
  • Business Plan: Include a description of your business, challenges faced, and how the SBA loan will be used to address these obstacles. 
  • Business Lease: A signed lease agreement or note from your landlord offering terms. 

5. Loan Application History

  • Copies of any previous loan applications to offer lenders transparency.

6. Income Tax Returns

  • Signed federal income tax returns for the business for the last three years.

7. Resumes

  • Provide resumes for all principal business owners to highlight their experience and qualifications.

8. Purchase Agreement or Additional Business Documents

If you’re purchasing an existing business, include:

  • Current profit & loss statements
  • Federal tax returns for the previous three years
  • Proposed Bill of Sale, including terms
  • Inventory, machinery, and equipment schedules
  • Franchise, job, or licensing agreements (if applicable)

9. Equity Injection Proof

  • Demonstrate your down payment in the form of bank statements or other evidence.

10. COVID-19 Adjusted Documentation 

Given the lasting impact of the COVID-19 pandemic, lenders now often require additional documents:

  • Pandemic Preparedness Plan: Outline how your business has adapted to COVID-19 challenges.
  • Market Recovery Analysis: Include data on how your industry and region are progressing post-COVID. 
  • Stress testing for operating scenarios, particularly in industries like hospitality or retail.

If your business operates in a highly affected sector, include extra documentation or expert opinions to demonstrate resilience.

Is Preparing an SBA Loan Application Overwhelming? 

Partnering with experienced loan packagers or services like Avery James Commercial Lending can simplify the process. These experts can assist in compiling and reviewing documentation, guiding you through the stringent requirements, and connecting your application to a network of qualified lenders.

At Avery James Commercial Lending, we understand the challenges small business owners face. Our team ensures your application complies with all SBA requirements and provides expert recommendations for navigating post-COVID financial considerations. 

Maximize Your SBA Loan Success Now 

SBA loans are powerful funding tools for growing businesses, but success lies in preparation. By using this checklist and thoroughly reviewing all requirements, you’ll set yourself apart as a serious and qualified borrower.

Need help with your application or navigating complex requirements? Reach out to learn how Avery James Commercial Lending can simplify your SBA loan process and connect you with the right lender.

Get started on your SBA loan application today!