SBA Loan Financial Statement Requirements for Business Owners

When you’re looking to take on a new opportunity to grow your business, an SBA loan can help provide the capital you need. However, during the application process, you’ll be asked to provide several documents, including financial statements for your business; and before your loan can close, you’ll need to provide that information again.

Here’s a closer look at the SBA loan financial statement requirements, why the SBA requires the level of documentation that it does, and how you can make the process smoother and easier for yourself.

Why the SBA requires updated financial statements

SBA loan programs such as the SBA 7(a) loan option and the SBA 504 loan program are designed to help you access the funds you need to grow your business. These loans allow for a range of uses and include competitive rates, more flexible approval criteria, and beneficial repayment terms. That’s why many small business owners turn to these loans when they need to fund things like buying or renovating a commercial property, buying a business, purchasing major equipment, refinancing existing debt, and more.

Because of the projects these loans are used for, it can take several weeks or even months for them to close and fund. To ensure that you’ve stayed on track with your business plans and financial projections, updated SBA loan financial statement requirements are in place to allow a last look at your business’s financials before the loan closes and fund disbursement begins.

This is because financial statements are considered “expired” if they’re older than 120 days. This also provides lenders and the SBA an opportunity to handle any potential problems that may have come up between the start of the application and the closing.

SBA loan financial statement requirements: What’s required and when

Before closing, you’ll need to provide interim financial statements and/or tax returns for your business that were created within the last 120 days before submitting them to the SBA. Interim financial statements that are required include a balance sheet, an income statement, and an aging of the accounts receivable and accounts payable. You can easily produce these documents using bookkeeping software such as QuickBooks, Xero, or FreshBooks. However, if you don’t use bookkeeping software, you’ll need to ask your bookkeeper or accountant to help you with them. Tax returns will include business and personal returns, if separate, or the combined tax return, if applicable (such as for sole proprietors). In addition:

  • For existing businesses that file using IRS Schedule C (sole proprietors), a balance sheet is required with the latest tax return or interim.
  • Start-up projects are required to provide two full years of assumptions, including a monthly breakdown of revenue projections for the first year.
  • If your business is an affiliate, you must provide the last two fiscal year-end financial statements and/or federal income tax returns of affiliates (or three years of fiscal year-end statements and/or federal income tax returns, if the industry size standard is used to qualify for SBA size standard).

    The SBA requires returns for the affiliates because the figures are included in the size standard calculation to determine if the business is eligible. Additionally, lenders are required to ensure that an affiliate’s cash flow doesn’t hurt the operating company that’s applying for the SBA loan.

Updated financials needed upon IRS tax-return deadlines

If the date of submission or closing falls within the IRS tax-deadline dates for business or personal tax returns, then your tax returns are required (or a copy of the extension filing). The typical tax deadlines are:

  • March 15 for partnerships and S corporations
  • April 15 for sole proprietorships, C corporations, and individuals

Pursuit is here to help

Every day, Pursuit works with business owners like you, including many first-time applicants who are new to the business loan application process. We’ll be with you through every step of the process and make sure that your application is complete and correct, from start to finish.

We also have a comprehensive Business Resource library online that includes information about how to create accurate financial statements, including interim financials that meet SBA requirements, and much more. We encourage you to look through our resources to find the specific information you need to manage your business effectively and efficiently.

If you haven’t applied for a loan yet but are interested in exploring options, Pursuit has more than 15 loan options tailored to the needs of small businesses. Take a look at our options, then contact us to find out which options best meet your needs today and support your success as your business grows.

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