SBA 7(a) Paperwork Explained: Business and Affiliate Financial Statements

 SBA Paperwork Business and Affiliate Financial Statements 

In addition to required forms that the SBA supplies, you and your business affiliates need to provide financial statements for your business. This helps demonstrate your ability to repay the loan. In your paperwork, you should include a current (dated within 90 days) financial overview statement, as well as financial statements for the past three years. These financial statements are separate from the personal financial statement, which is outlined in SBA Form 413.

SCORE, an SBA partner, has templates and online tools to help small business owners set up each of these financial statement documents at score.org.

What financial statements should I include? 

You should include with your loan application paperwork:

  • A detailed, signed balance sheet 
  • profit and loss statements 
  • A one-year projection of income and explanation of how you intend to reach that income level

What is a balance sheet?

This is essentially an overview of your business. It’s a simple equation:

  • Liabilities + owner’s equity = assets
  • The two sides of this equation must balance. 

There are two types of assets. Current assets include cash or assets (like accounts receivable) that can be quickly converted into cash. Fixed assets include things like equipment and land. Both types of assets should be factored into the balance sheet.

There are also two types of liabilities. Short-term liabilities include accounts payable and taxes. Long-term debt refers to liabilities such as bank loans. Factor both types of liabilities into your balance sheet.

The owner’s equity includes any invested capital or earnings.

How should I set up the profit and loss statement?  

The Profit & Loss sheet is also referred to as an income statement. These statements can also help business owners project future revenues. First, use this equation to determine net profit:

Gross profit – operating expenses = net profit

The gross profit should be calculated as total sales minus the cost of the goods (such as raw materials or inventory). Don’t forget to factor in overhead costs like utilities and insurance. 

Keep in mind that you’ll need profit and loss statements for the past three years to show that your business has a strong financial standing.

How do I project my income?

When you’re preparing a projection of income, it’s important to understand that it’s nearly impossible to project (especially a full year of income) accurately down to the dollar. Examining your profit and loss statements from the past three years, however, will give you a good idea about the range of income you might expect in the coming year.

To begin, think about the life cycle of your business. When do you have the most expenses? Which times of year tend to bring in the highest revenue? You can begin a simple spreadsheet broken out month-by-month with a sales forecast. Using your past sales numbers, and any revenue, product, or changes that could affect sales you already know about, you can make an educated guess about your sales revenue in the upcoming months.

Next, you should add columns to your spreadsheet that estimate expenses. You can again use your expenses from the past year to help you think about what your expenses might be in the months ahead. Don’t forget to factor in expenses such as salaries, equipment/supplies, rent, utilities, and marketing costs. 

Your projected sales and expenses will help you estimate your income for the year as accurately as possible. In addition to your spreadsheet, you should include a written explanation of how you arrived at your income estimate. 


To learn more about the SBA 7(a) loan program or to apply for a free quote, simply click the button below to connect with our partners at lendio!