SBA Loan Criteria to Watch Out ForBanker Resource
September 24, 2012 — 1,096 views
The U.S. Small Business Administration loan process provides a unique, government-sponsored financial help to thousands of small businesses every year. However, each loan has to also meet certain criteria in terms of documentation for it to be allowed. All the criteria together provide a proper filtering of loan applications to direct loan funds to those small businesses that should be helped per government loan rules. Failure to secure this information can make a loan problematic or subject to further review later on.
SBA Loan Documentation Criteria
Basic information requirements for all SBA loans include data that covers borrower identification as well as basic purpose and financial information. This criteria has to include:
• Personal background data including name, age, business name, education, criminal record if any, mailing address and contact data.
• A resume copy that explains career background with a particular focus on business ownership, management or leadership experience.
• A proposed or existing business plan for the company to be supported by the request SBA loan. This could include a background, company organization discussion, and financial statements (balance sheet, cash flow, and income statement) or pro forma projected financial statements with detailed assumptions. It should also include statistics and a profile of the business including employees, divisions, and operations.
• Personal credit report of the borrower as well as a business credit report of the existing company if one is available and the business is a separate legal entity from the individual filling out the application.
• Income tax returns from at least the last three tax years both for the business as well as the individual applying. These forms should include the actual signed tax return at a minimum.
• Bank statements that show all current cash and loan activity of a business or applicant. This should include both personal and business statements.
In addition to the above, an SBA loan can require documentation and proof of collateral for the loan, legal documents providing clear detail of business ownership and applicant status, and any existing legal commitments such as leases or rental agreements in place.
Finally, the SBA loan process will require information on the purpose of the application. This includes why the loan is needed and how much, how the funds will be used, what will be bought and from whom. It will also include an analysis of any other existing business debt as well as whom the entire management team involves.