Personal Financial Statement for a Bank or SBA Loan
When a small business applies for a loan, the lender almost always wants to know about the owners as well as the company. The personal financial statement is how they find out. It lists what each owner owns, what they owe and what they earn, and for SBA loans it is completed on SBA Form 413. Getting it complete and accurate the first time avoids one of the most common delays in a loan application.
What Is a Personal Financial Statement?
A personal financial statement is a snapshot of an individual’s finances on a specific date:
- Assets: what you own, such as cash, retirement accounts, investments, real estate, vehicles and your share of businesses
- Liabilities: what you owe, such as mortgages, auto loans, credit cards, personal loans and taxes due
- Net worth: assets minus liabilities
- Income: salary, business income, investment income and other sources
- Contingent liabilities: obligations that could become yours, such as loans you have guaranteed
Lenders use it to judge whether the owners could support the business, or the loan, if things went wrong, and how much of their own wealth is already committed.
Who Has to Complete SBA Form 413?
For SBA 7(a) and 504 loans, SBA Form 413 is generally required from:
- Each owner with 20% or more of the business
- Each proprietor and general partner
- Each managing member of an LLC
- Any person providing a guarantee on the loan
Married applicants are generally asked to include the assets and liabilities of their spouse and minor children. Microloans generally do not use Form 413, and conventional bank loans use the bank’s own version, which asks for similar information. Confirm the current requirements with your lender, because forms and instructions are updated from time to time.
What Does Form 413 Ask For?
Form 413 follows the same structure as most personal financial statements, with supporting sections for detail:
- Cash on hand and in banks
- Retirement accounts and life insurance cash surrender value
- Stocks, bonds and other investments, with their market value
- Real estate owned, with its value, mortgage balance and payment
- Notes and accounts payable, with each creditor, balance and payment
- Installment debts, such as auto loans
- Unpaid taxes
- Other assets and liabilities
- Income sources and contingent liabilities
How to Fill It Out Accurately
- Pick one date and value everything as of that date.
- Use current statements for bank, retirement and investment balances, not estimates.
- Value real estate realistically, using a recent appraisal or a reasonable market estimate, and list every mortgage and line against it.
- Value your business interest honestly. Lenders will compare it with the business financial statements.
- List every debt, including those you think are minor. Credit reports will show them anyway, and omissions damage credibility.
- Include guarantees you have signed for other loans as contingent liabilities.
- Match your tax returns. Income on the statement should be consistent with the returns you submit.
- Sign and date it, and update it if the application takes more than a few months.
How It Connects to the Business Application
The personal financial statement is reviewed alongside the business’s own financial statements, tax returns and debt schedule. Inconsistencies between them, such as a business value on the personal statement that the business financials do not support, are among the most common reasons a lender comes back with questions. Preparing both together, from the same records, keeps them consistent.
Our guide to SBA loan requirements covers the rest of the application, and our guide on whether a new LLC can get funding explains why lenders lean on owners’ finances for younger businesses.
Templates and Formats
The SBA publishes Form 413 on its website, and banks provide their own personal financial statement forms. The format matters less than completeness and accuracy: a lender would rather see an honest, fully supported statement on any reasonable form than a polished one with gaps.
Common Mistakes on Personal Financial Statements
- Leaving out a credit card or auto loan that will appear on the credit report
- Valuing a home or business well above what can be supported
- Mixing dates, so balances come from different months
- Forgetting loans you have personally guaranteed
- Listing income that does not match the tax returns submitted with it
Each one invites questions and delay. A quick review against your statements and credit report before submitting avoids them.
How We Help
At The Gabb Group, our SBA loan preparation includes assembling the personal financial statements for each owner alongside the lender-ready business financial statements, so the whole package is consistent. We then connect you with lenders through our partner Asenta Capital. Lenders make every credit decision.
This article is general information about loan applications, not legal or financial advice. Confirm current requirements with the SBA or your lender.
Questions About Personal Financial Statements
What Is a Personal Financial Statement for a Loan?
A snapshot of an owner’s assets, liabilities, net worth, income and contingent liabilities on a specific date, used by lenders to evaluate the people behind a business.
Who Must Complete SBA Form 413?
Generally each owner of 20% or more, each proprietor and general partner, each managing member of an LLC, and anyone guaranteeing the loan.
Do I Include My Spouse's Assets on Form 413?
Married applicants are generally asked to include the assets and liabilities of their spouse and minor children. Confirm with your lender.
How Do I Value My Business on a Personal Financial Statement?
Use a reasonable, supportable value consistent with the business’s financial statements. Lenders compare the two.
How Often Should I Update My Personal Financial Statement?
Whenever you apply for credit, and again if an application takes more than a few months or your finances change significantly.
Is the Personal Financial Statement the Same as a Credit Report?
No. A credit report lists debts and payment history from the credit bureaus. A personal financial statement is your own summary of assets, liabilities, net worth and income, which lenders check against the credit report.
