SBA Loan Requirements, Application, Borrowing, and PFS Form 413!

SBA Loan Requirements, Application, Borrowing, and PFS Form 413!

You are about to experience an awesome Small Business Administration loan complete guide that I imagine will be helpful for you in anything from considering needing funding for your business through successfully getting one of the best business loans available if you’re in the United States of America which is a small business administration loan. I’ve heard from my loan advisor on Fundera that you can get up to 10-year terms or standard 10-year terms of 8% interest. That means approximately $100,000 loan would be about $8,000 in interest and the payments might only be less than $2,000 a month for that which is outstanding. That’s a really good business loan, maybe even like $1500 or less. I was just off the top of my head. Let’s go in

What are we going to cover in this video? First, we’re going, to begin with, a look at the basics. And you might be thinking, “Okay, who are you to be telling me this”?

I’ve had a business teaching online for 71/2 years. I’ve been going through the business funding process to scale my business up recently. And I’ve just gone through all this process researching a whole bunch of different loans and applying for an SBA loan only to be told that my cash flow was not adequate for it. If I had applied like 5 months ago, I’d have been in good shape. So, I’ve just done this myself as a business owner which might be nice for you since there’s no personal incentive in this for me to get you to use any of my stuff. This is just what I’ve learned and I think it might be helpful for you.

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Here’s what you want to know upfront. You need to have an established business if you want a small business administration loan. From what I’ve seen, this is not something for a startup hoping for some capital. This is for a company that’s already profitable, already making money and wants to scale up.

These loans are the basics of how these work. A Small Business Administration (SBA) loan is a bank loan that’s guaranteed by the government. This allows the bank to take lower if hardly any risk on their own since its the government-insured loan and then the government helps the bank get the money back. This is how it works. So, the first thing we’ll do in this is to cover the basics of What is an SBA loan? Do you really need it? And get into a little bit about borrowing money. I’ve borrowed money lots of different times in my life and I’ve consistently paid it back off. There are some critical factors you need to consider before borrowing money. Then we’ll go through and look at the SBA personal form instructions and I’ll walk you through how I completed this form. I spend hours researching and this is fresh in my head now and to me, it’s a waste of time if I don’t get out here and teach it to you. So, I’ll go through all of what I learned, filling out the personal financial statement which is very important to complete this. I’ll give you a quick look and explain my balance sheet about how I did that.

The goal of this whole presentation is for you to be able to either not waste your time like you could say I did. Even though I don’t view anything as a waste of time because now I can teach this. You could easily look and say I spent 6 hours that I could have used to make money going about something unsuccessful at least in the short term. You can also watch the SBA Loan Requirements, Application, Borrowing, and PFS Form 413 video or continue reading this blog post here on my Website.

So, let’s take a look upfront. If you’re thinking about an SBA loan and you are wondering if it’s right for you, let’s look a little more at the government website and see what an SBA loan is.

The benefits of the loan are very clear. Long repayment terms and low-interest rate then what I heard 10-year term 8% interest rate. That’s good compared to the loan offers I’m getting anywhere from 13% to 17% one-year terms. That is a really good rate.

You also can get up to $5.5 million to fund your business. I don’t know why you’d go through this process to get $500. This is a pretty time-consuming process so please make sure it’s worth your money in time to go through this process. Consider how much money you could make just working versus getting a small business administration loan. Please don’t fool around with $500 in a loan. In my opinion, this is something you want to do to get the biggest loan possible. At the same time, don’t ball than you need because more than you need that adds up. But I think you want to be looking for a big loan to merit all the time this will take. You can do things like working capital and fixed assets.

Here are the key eligibility requirements,

  1. Be a for-profit business
  2. Do business in the U.S.
  3. Have invested equity
  4. Exhaust financing options

That means the basis they expect you to put your own time or money into the business. This shouldn’t be a totally afk hands-off business that you’re not involved in, you should be putting your own time or money into this business and it says exhaust financing options. You can’t get funds from any other financial planner. I honestly don’t know what that means. I had a loan out already. I don’t know if that impacted it or not but the basic idea of this is you want to go for a small business administration loan first and I don’t know if that means you can’t borrow once you’ve taken this but you want to start with the Small Business Administration loan.

In this theoretical scenario, I could go back and rewrite time, I would go immediately for a small business administration loan 5 months ago, because I would have been a shoo-in for it. I had great cash flow and the business was profitable for the last 12 months whereas I’ve invested a lot of money to build my business up since then and I started with business credit cards to do that which was not smart at all. So, the first loan you want to go for is an SBA loan. You don’t want to apply for and build credit cards and run those up even if there’s 0% interest and they don’t charge interest for a year, which is I’m like, “Wow, just take these zero percent interest credit cards for a year, run those up and then if I need more loans I can go for it.” You want to start with a small business administration loan.

The other thing you need to know upfront is you will need to do a personal financial statement. And basically, this is a key factor. You’ll provide a personal guarantee as far as I can see. If the business goes under, you are liable and the government of the USA will be reinforcing that. This personal financial statement gets into all of your money, all the cash you have on the bank, and savings account. One very important note, if you are married filing jointly, you need to file this with your spouse. All of your spouse’s information needs to be included in this form. You need to file it together with your spouse. All of the cash, savings accounts, and liabilities need to be added up for both of you. Especially if your marriage is not in a perfect spot or your spouse might not give you all the personal financial information then don’t even bother with this process because you need to have your spouse on board if you’re married filing jointly to give you all of this stuff and preferably a full credit report with all debts on it. You don’t want to have any surprises or anything come up on this.

All real estate needs to be included. You even need your life insurance policies on this form. If you’ve got any unpaid taxes or things like that, these loans are very competitive. If you are going to fail big in some of these areas, you probably don’t want to waste your time of it. If you got an unpaid tax, I’m not sure why you’d be doing SBA loan.

You don’t want to go lie to anybody on an application. They make it very clear you do not want to lie, embellish or even use nice figures. On things like this, you want to be as accurate as possible and I have all the paperwork to back it up. You don’t want to do anything like that when you do the Small Business Administration form because you are applying and the government is reviewing this. If somehow you get one of these and they find out you lied or something, that could lead you to the penalties. So, this is not something to just kind of be casually done and fool around with. This is something if you know you want to fund and you’ve got hours and hours to invest, to get all these forms done, get your balance sheet done, then you know that this might be a good use of your time. I’m trying to deter you from doing this if you’re just kind of casual.

I think I’m surprised when everything doesn’t go exactly how I imagined it. I’m actively deterring you don’t even start this process unless you’ve got very good odds and completing it successfully. Now, let’s look at another key thing you need to know in this process that was not made clear to me upfront by my research and even my Fundera advisor was not able to fish this out before we completed the whole application process.

A huge consideration on this is your cash flow. I’m going to show you my QuickBooks information here. I’m going to show you my profit loss last year and we’re going to give some advice based on this. My profit and loss last year looks good $118,726 profit. That is the position you want to apply for a small business administration loan in. I have not started spending a lot on contract labor at this point. In fact, last year I mostly spent on advertising, and then contract labor. You see, I made a lot of profit last year and didn’t spend much money from a cash flow point of view. That looks really good.

Now here’s what happened in 2019. I saw that my cash flow was steadily declining. I made most of the money at the beginning of the year, I started playing around making music online and doing video games. And then my revenue consistently declined which motivated me to think about how can I create some more commercial content? How can I make a better business than I’ve ever made before? How can I help more people than I’ve helped before? And long story short, because this is already long. I ended up making an education platform on Uthena.

To get people to that education platform on Uthena what I do is, I pay contractors to film video courses and those video courses I then make available with Private Label Rights to my partners On Uthena. I then sell those Video Courses and various Course Bundles on my website and this is the most profitable business I’ve ever done before. Well, that’s all well and good. As soon as I realized I was going to do this, if I would have immediately applied for an SBA loan, I would have been nearly certain to get one. I’ve got a credit score that’s around 800. Because I’ve always repaid the debts that I’ve always paid on time.

As you can see, the numbers look great from last year cash flows. I was at the beginning of 2019. As soon as I had this business idea with an established business of 71/2 years, I was in a rock-solid position to apply for an SBA loan. What I did instead is, I thought, “Well, I can just apply for some zero percent interest cards with my great personal credit and my great business credit”. I got $30,000 of credit cards at 0% interest and I thought that’s enough to film several video courses. Let’s just do that.

So what I’ve been doing in 2019, this is a 2019 income report from January to the beginning of May. I’ve spent $72,000 on contract labor. Now if you noticed, I spent a total of $22,000, in 2018. I’ve made a massive increase in contract labor, which has resulted in all these new 2019 video courses in here hundreds of hours of video courses in 2019 that I’ve created a ton of value. These haven’t even hardly started to earn back all the value that they have. Now, I’m grateful. On Uthena and YouTube, as soon as I’ve put these up, the sales have been going up consistently. Their revenue was something like $6,000 in February, $8,000 in March and over $10,000 in April. And at this rate, we might be around $12,000 to $15,000 in May.

Well, when you look at this balance sheet though as a potential lender, this doesn’t look very good. Does it? A total of -$54,568 in 2019. Now, this does not look like a good idea for a loan, does it?

So what I did is I just took these 2 business credit cards and ran them up. And I also got a PayPal business loan because again like the credit cards, it was fast and easy and I already had a credit card with Chase and I ran that up too. So, I accumulated $76,000 of debt in 2019 that I did not have at the beginning of 2019. I have less cash in the bank. This is the balance sheet that I did. One of the key things you need to do is put down your business assets and your liabilities. If you look at this, this does not look very good from a lender’s point of view because I’ve seen a bunch of money being spent and even I went through $15,000 in cash to pay my bills, mortgage, and the student loans, etc out of the account. Because then what you can do if you withdraw personal cash or you borrow money from the business and then when income comes in, I can just take the income out for my personal payments and then I can borrow money for the business expenses. Then I don’t have it on my personal credit.

Long story short, this is not a good way to do it. This is not a good way to do it at all. The smart way to do it would have been to immediately go for this as soon as I had this idea given I already had an established business. Immediately go for the Small Business Administration loan before doing absolutely anything else. I’ve applied for so many things. Now, my business credit doesn’t look very good because I’ve applied for a bunch of things. There’s been a bunch of inquiries, there’s only been PayPal loan issued and once that PayPal loan was issued, almost everything’s got denied since then. Thus, because when businesses look at the cash flow and they see how many other credit things that trigger this panic like, “Okay. This guy’s rapidly expanding his credit. He might be about to just take all the money he can and declare bankruptcy.” So that triggers off businesses.

So, you’ve spent 17 minutes of reading time to know the reasons not to go through this process but I am going to walk you through how I did all of this process. Because if you’ve been through all this and you’re certain or you might have someone you know, I hope my experience can help you with it.

Now, let’s look at how to fill out this form. I recommend using something like PDF filler because when I went about applying this, I’d read a bunch of posts on Fundera. I sent everything to Fundera first and then Fundera’s advisor recommended to look at an SBA loan. He sent me a form to fill out but all the information doesn’t save in it. You may need hours and hours and hours. For me like 5 or 6 hours to get all the documents together, to put one thing in the format time, to go through and research every single section.

You want something where you can save all the data. For example, when you fill out all the Stocks and Bonds, you don’t lose that for some reason. And it would just break my heart for you to spend 3 hours filling the form out and then you get something like, “The page doesn’t load correctly” and you lose all of it. So, use PDF-filler. It saves it every time you make a change. And I don’t have an affiliate or referral code at this point but maybe I will in the future. I just do this stuff because it’ll be useful for you and doing a bunch of that stuff adds up good for me, doesn’t it? So, I’ll show you how to fill out the form.

The most helpful things I found were on Fitsmall Business SBA Form 413. I went through this a lot to fill it out and Fundera also has good information. The problem with these is, some of them are contradictory, For example, in the picture above, one form says to go in and put all your loans including student loans and vehicle loans in Notes Payable to Bank and others and then it says to put these again in the Installment Accounts (Auto) and then it says to add up all the liabilities in this column. Well, think about what I just said for a minute. If you put all that stuff in twice and add it up, your debt will be added up twice. I did not realize upfront. I needed to do everything with my spouse. I filled almost this whole form out before realizing that. I mentioned it upfront so you don’t have to do the same thing. You see how that works. So, thank you for sticking with me here for just 20 minutes of reading.

Let’s go in and look at how to fill this out. And you can always refer to the written guides on Fitsmall Business. So first, the “As of date”. You might think this is straightforward to just put today’s date on it. But the standard for this is to put the end of last month’s date. That is the standard way of doing it. So for me, I was applying in May 2019, the standard way to do it was to put April 30th, 2019. Then I pull all my bank statements, credit card statements, life insurance policies, taxes from previous years, and you pull all that stuff up for April and you make it current as of the end of the month. That way, you’ve got documentation to verify everything you’ve put up on here. If for example, you make some significant transactions up or down in your cash and you try and date it on an exact date but then you don’t have a statement that matches that month, then it might not all add up.

These loans are competitive. You want everything to be super easy and add up because the bank’s going to be looking at this and even though these loans are guaranteed by the government, the bank still wants and the government wants as few problems as possible. So, I imagine if I was them, I’d be looking for irregularities, poor math, any signs if someone’s doing it halfway. An easy sign of that is just not putting the date on there. If all of your documentation is requested and you don’t have any bank statement that matches what you put on the form, that could potentially be a concern. It’s also a way to standardize everything. You put “As of Date” for the last day of the previous month. Then you collect all of your official bank statements, credit cards, mortgage, you collect all that stuff from that month. You’ve got statements with the exact numbers that you’ve submitted. Only then it’s super easy.

What I did when I started this office, I just started looking at my bank account balance on hand that day, and then that screws everything up if you do it that way in terms of having documentation. So on the main page of the document, now that I’ve covered the date, you put your name, home address, business phone and, other basic information. I recommend putting the best phone number you’ve got on which you’re available, the best address you’ve got and also to read the instructions on the form that it gives you. You can check them on Fitsmall Business.

This is another important thing, “Who needs to complete this?”

If this is just like me then this is just my sole proprietor business but if you’re married, then you need to provide this with you. See it says, if you’re required to provide this form, your spouse must be included. If you file a joint tax return it says this doesn’t mean your spot guaranteed on the loan but it lets you know that you have a joint agreement unless you’ve got a prenup.

Now, were you smart enough to get a prenup? Probably not. So, don’t worry about that. If you’re not doing the business by yourself, if you’re a partner in a partnership, that means each partner partnership needs to fill it out. Now, this could get involved. Let’s say, you’ve got to 2 people who are both married, both people might need to have everything from both relationships and do these own forms. If you’ve got an LLC with like 3+ people, then he needed H-managing member of the LLC on there. If you got owners with 20% more in the business, then you might all need to do it. And if anyone is providing a guarantee on the loan, then they might need to do it.

So, if you think this form looks bad to just do yourself, then you can have a good time if you need like 8 people to do this thing. So, how do you calculate all the things? I’m about to show you.

You need to check things and savings account statements. If you’ve got IRA, 401 (K) retirement account, you need those. I only get a life insurance statement once a year and apparently, I forgot that we even did this. I’ve got a half-million-dollar policy. So, if I trip and fall on the street and get run over by a car, then my family will get half a million dollars and they won’t have me around anymore. I’d be sad, wouldn’t I? Stocks, bonds and other investments you’ve got showing the current value. This is why you need to do the standardized statement day. That way, you can grab all these statements. You should have all the statements for the previous month. You can just use the statements instead of trying to go figure out each of these values itself. If you’re employed, you’ll need a pay stub with your salary. If you get 1099s like my wife Laura gets 1099s and then she didn’t have any expenses. So, I included her income on there as the salary. Now if you’ve got statements, anything like this, you need that or if you have mortgage statements, auto loan statements, credit card statements, you need all this stuff before you start. 26 minutes of reading, still telling you probably might not even want to do this.

But if you’re willing to go through and do all of it, you might be able to get a really good loan and save much more than 15% on car insurance. Let’s go and look through some more of these.

Now that you’ve got that done, they split up cash on hand & in banks and savings account. Now, if you got like 10 grand in the house or something, I don’t know whether you need to put that on there or not. Now think about it. If you’re like paranoid enough that you’re not keeping it in a bank in the first place. I had was going to put like $1000 or $2000 in cash because I try and keep some cash on hand, I probably all let me show you my wallet, I got like 400, my wallet or something like that. And then I just keep a little bit of cash around the house just in case like $100 in a drawer, give my daughter $20 bills to play with. I was going to put that on the statement (that’s stupid). Just use your bank statements and put your extra cash in here. So, you go through you put your it splits up your checking and your savings accounts, which is great because when I first did the form, I didn’t split them up.

So, for the retirement accounts, I’ll warn you ahead of time that these might suck. It says “Describe in Section 5”. Now if it says describing section 5, that means you’re going to need to elaborate significantly on this. So, you’ve got 5 things that say “Describe in Section 5” and then stocks and bonds have section 3.

So first, Section 3. Let’s look at Stocks and Bonds. Now, if you’ve got an account with a whole bunch of different things, then you may need to do an entire page with all the different numbers of shares, the securities, and all that good stuff on an additional document. I just summarize these here. And I don’t know if that’s the right way to do it. Laura had 4 different types of things in her investment account. So, I just summarized 15 different stocks because the total value was like $10,000. Now files claiming like a million dollars in stocks and I had 100 different ones, I’d probably want to list each individually. But I figured like $10,000, I’m not going to go through and do an attachment with every stock on it.

Now, I’m really glad I didn’t do that since the loan advisor says there’s no point in finishing this process anyway after I did this form. So, keep that in mind ahead of time, if you’re looking to do this.

Now, look how small this is. Do you see how many things up here? I ought to title this SBA form critique or SBA form roast. There’s other personal property that includes your cars, other assets, accounts and, those receivables. And then there are other retirement accounts. Now if I’m loaded, you gave me 4 lines to put this in here? Theoretically, this is where if your business has an established value or some kind of fair market value, you’re supposed to write for your business in there.

Now, if you can’t fit all this in there, then you might need to do an attachment. So, if you’ve got all these things to report on there, you need to verify and put an attachment at another page to show and explain the value of all these different things. What I had in there was just my exact cars, their makes, models and, value. I was surprised that almost $30,000 in cars, I paid like $60,000 for them and it’s nice. I still have $30,000 and no loans. So, I’m grateful. As I got all these other loans all have any car loans, that’s good. I paid my whole car loan off. It was 6% interest. I paid $28,000 to $29,000 on and off ahead of time. I’m like, “Yeah, I got this cash in the bank, I’ll pay that car off”. Now I’m taking business loans at 13%. Welcome to the real guys. You’re like “I’m not going to keep reading this whole post. It’s so bad.” It’s so good, right?

Now, if you’re wondering about the Present Market Value, I bought my house a year ago and it went down like 8%. At first, I wasn’t going to put that but again, this is a government form. They got these big nice little warnings down at the bottom of it. Just put the current value of it and look, you can go find the real estate website that has the highest value if you want to, and put that on there. But when you do that, you’ve got verification that some 3rd party agrees with you. I wouldn’t just stick your idea of how much your house is worth in here especially if it’s significantly different from what any third-party website will price. What I did is, I just googled my address and found the one that was the highest. There was $30,000 or more than 10% of the deviation between them. So, I just stuck the highest one in here. You get all your mortgage name and all that good stuff in there. If you got more than 3 properties, you got to put another attachment on.

Once you get done with that, then you get into section one “Source of Income”. Now if you’re a self-employed sole proprietor business owner like me, you don’t get a salary, you don’t get in that investment income and you don’t have any real estate besides your house, then you need to describe your other income below. So, I just put my previous year’s profit in the income below. Then, if you’ve got a spouse and they have a salary, you can put that or like my wife Laura got her 1099s and she doesn’t have any expenses for her business. So, I just put that in there for her salary. Since that income is all reported on those tax forms on our taxes to the IRS, you also need your previous at least a year if not more than a year tax form.

I’ve passed over a lot of this, I’ll go into it and painfully more detail.

So now the Liabilities. You’ve got your accounts payable. Now most of us are not going to have accounts payable thing but if you’ve got like a store card or something that’s not specifically a credit card, then you might have an account payable according to the instructions in here. So, you can always just be asked over something, you can always read forms at Fitsmall Business. For example, you can include your child support, a pension or other income. You can put your interest in savings and stuff on stocks and bonds or recurring. If you’ve got investment income, you can always look at that form.

What you do after that is just add all these up, which is why there shouldn’t be any duplicates in there. You put your net worth and you subtract your assets from your liabilities. Hopefully, you’ve got a positive net worth here. When I put my business value in there, it was plus like $100k+. When I took that out, it was minus at least $100k+. You might think well, “Why do I need to tell my liabilities and net worth in here”? That way they just have the same number as someone can take a calculator and go down and add everything up here and make sure it adds up. So this number should be the same here because when you subtract your total liabilities from your total assets, you’ll get your net worth. Then when you add your total liabilities back to your net worth, you’ll get it back over here again. It’s kind of like a little check on it.

In Section 2, if you’ve got credit cards, you can put the name. It says Name and Address of the holder but there’s a really small amount of space, you can abbreviate. I just put the bank name and the credit card. Since it was filing jointly, the name of rather it was me or Laura on it because they are certainly going to pull a credit report and look at all this stuff for themselves. You just want it to match whatever it says on the credit report. Thus, if you’ve got a credit card, the original balance is probably zero. I read about the current balances on the instructions it said there, “Current balance can be zero if you pay your balance in full every month and don’t retain a balance”. I put whatever the latest credit report balance set on it, the minimum payment and the monthly frequency and if it’s a credit card is probably unsecured.

I talked a little about stocks and bonds already, you might be able to get away if you’ve got like a Vanguard account or some kind of a trading e-trade account, you might be able to get away with just sticking the account name in there and the whole value of it, If it’s smaller. I doubt you’d be able to get away with it if it’s like over $10,000. But since there are only 4 spots, you might be able to just put your account name and it depends on what your loan processor is going to do but that’s what I tried to do on here, but it didn’t matter. Ideally, you could put every one of these individually and submit an attachment, the details, the number of shares, securities costs, market value and all that on there. That’d be the ideal way to do it. Sometimes I just don’t do stuff the ideal way and it’s fine. I still get great results most the time except when I decided how to do my business finances.

Other Personal Property & Other Assets. This is where you put all this stuff as we talked about from the Assets section. You need to put all your IRAs, their retirement accounts, all your accounts and receivables all your personal property and all your assets in that one little box I showed. Fortunately for me, it was pretty easy to put all that in there. Hopefully, you just put any unpaid taxes and liabilities.

Then you’re just to the life insurance policy. You need the face amount, the amount when you die. How much money will somebody get when you die? “Half a million bucks when I die, Let’s Go :smiley:”

So you got the face amount or the death benefit and then the cash surrender value of policies. That means if you just have term life insurance that has no surrender value that’s basically like auto insurance. They’re just taking your money and if anything happens, then they might give you something back. The whole life policies work different and if you cancel the policy, they have what’s called a surrender value. Mine’s something like $1400. If I cancel my whole life policy, I get $1400 back from that. So that’s what the cash surrender value is, and then the name of the insurance company and beneficiaries. Finally, you need to sign and date your social.

Hopefully, you fill this form out in a way that you can just copy and paste it if some of your lenders using something like DocuSign. If you need to do this and print this out, this is a good way you can save it, print it or you can even make this as a PDF directly from PDF filler. It is really powerful.

Thank you very much for reading this, I love you. You’re awesome. I’m certain at this point that I’ve done my best to tell you all the key things I learned about this process to empower you to have an easier time doing this than I did.

Now if you’ve made it to the very end, you like to contact me, I recommend go to and contact me by clicking on Contact Jerry Banfield. That’s the best way to contact me directly and it is to use whatever options you have on this page. So many people I’m grateful following me online that this contact page is the only consistent, reliable way to get ahold of me and reach me. If you have questions about any of the links, just check the description of SBA Loan Requirements, Application, Borrowing, and PFS Form 413. We got all that in there. I love you. You’re awesome.

Jerry Banfield