The Complete SBA Documentation Checklist for Business Buyers

When pursuing an SBA 7(a) loan for a business acquisition, buyers often focus on the deal terms, price, financing structure, DSCR, and underestimate the amount of documentation lenders may request during underwriting. While requirements may vary by lender, SBA lenders are required to collect and verify specific information before submitting the loan for guaranty.

This guide is based on SBA SOP 50 10 8 effective June 1 2025 and reflects how SBA lenders typically apply those guidelines in acquisition underwriting. Pioneer Capital Advisory uses this framework when preparing clients for underwriting and helping them stay organized from LOI to close.

Core Personal Documentation SBA Lenders Typically Require

Because SBA 7(a) loans require personal guarantees from all owners of 20 percent or more, lenders typically collect a comprehensive set of documents about each guarantor. These items help lenders verify eligibility, financial stability, and identity.

1. Government-Required Personal Identity Documents

Lenders must verify citizenship or lawful permanent resident status before submitting the application for guaranty. Acceptable verification may include:

• U.S. passport or birth certificate (for U.S. citizens)
  
• USCIS documentation for permanent residents, as required under Section A, Ch. 1, Para. F of the SOP
  

2. Personal Financial Statement (SBA Form 413)

SBA Form 413, or the lender’s equivalent, is used to assess liquidity, net worth, and contingent liabilities. The SOP notes that original signatures are not required on personal financial statements for certain submissions.

3. Personal Tax Returns (Typically 3 Years)

While requirements may vary by lender, many request three years of personal tax returns to evaluate income trends, debt obligations, and consistency. Lenders also obtain IRS tax transcripts to verify that returns were filed and reconcile them with the information provided.

4. Credit Report Authorization

Lenders typically pull individual credit reports early to evaluate payment history, score, and any public records.

5. Statements for Personal Bank or Investment Accounts

Buyers must document adequate liquidity for equity injection and closing costs. Evidence must show at least 30 days of account activity when equity injection funds are withdrawn.

Business Financial Documentation Lenders Commonly Request

If the buyer has existing business interests or affiliated entities (ownership of 20 percent or more), SBA lenders must review financials for those entities as well.

1. Three Years of Business Financial Statements

For affiliated businesses, lenders typically require:

• Year-end balance sheets
• Profit & loss statements
• Interim statements (dated within 120 days)

2. Business Tax Returns (Typically 3 Years)

This applies to affiliate companies and may also apply to the target if not already supplied by the seller.

3. Business Debt Schedules

A detailed schedule of outstanding debts for affiliated entities is required to assess obligations and repayment capacity.

4. Organizational Documents for All Related Entities

Examples include:

• Articles of organization or incorporation
• Operating agreements
• Bylaws
• Stock certificates or membership ledgers (if applicable)

Lenders use these documents to verify ownership structure and ensure all required guarantors are included.

Documentation Specific to the Buyer’s Equity Injection

One of the most scrutinized parts of any SBA 7(a) acquisition loan is the buyer’s equity injection. Lenders must verify that the equity injection is real, properly sourced, and injected before or at closing.

Equity Injection Documentation Requirements Include:

According to SOP 50 10 8, lenders must maintain evidence verifying the movement of funds:

• Copy of the check or wire transfer showing money leaving the account
• At least 30 days of statements from the source account showing funds were available
• Statement from the receiving account or settlement statement showing funds deposited

Borrowed Equity Documentation (If Applicable)

If equity is coming from borrowed funds, such as a HELOC or seller financing in excess of minimum injection, lenders must review repayment terms and any required standby agreements.

Gifted Funds (If Allowed by Lender)

If permitted, lenders typically require:

• Gift letter
• Donor bank statements
• Documentation showing transfer and deposit

SOP states that a gift letter alone is not sufficient without supporting evidence.

Documentation Required for the Business Being Acquired

While sellers often supply major portions of this documentation, the buyer must ensure all materials are complete so the lender can underwrite the loan.

1. Three Years of Business Tax Returns and Financial Statements

Lenders typically require the seller’s:

• Three years of returns
• Corresponding financial statements
• Interim financials dated within 120 days

2. Current Debt Schedule

This helps confirm any loans to be assumed, refinanced, or paid off at closing.

3. Detailed Purchase Agreement

The agreement should include:

• Purchase price
• Allocation of purchase price
• Assumed liabilities
• Working capital adjustments
• Closing conditions

Any seller financing terms must also be documented.

4. Proof of Good Standing

Lenders require verification that the business is in “good standing,” as defined by 13 CFR §120.420.

5. Copies of Key Contracts

Examples include:

• Lease agreements
• Customer or vendor contracts (as applicable)
• Management agreements (SOP requires review of management agreements not included in franchise documents)

6. Franchise Documentation (If Applicable)

If the business is a franchise, lenders must review franchise agreements consistent with SOP requirements.

Additional Documentation Required During Underwriting and Closing

1. Environmental Questionnaire (If Required)

For certain industries or real estate-heavy transactions, lenders may require environmental assessments.

2. IRS Tax Transcript Authorization (Form 4506 C)

Lenders obtain a signed IRS Form 4506 C during underwriting and must receive and reconcile tax transcripts before closing or first disbursement even though transcripts are not required as part of the SBA guaranty application itself.

3. Insurance Documentation

Lenders will always require hazard and liability insurance. For businesses where the company’s success depends heavily on one owner and the loan is not fully secured SBA expects the lender to obtain life insurance on that principal or document why it is not necessary.

4. SBA Form 1050 (at First Disbursement)

Lenders must document disbursement of loan proceeds using SBA Form 1050 or equivalent.

A Brief Note on DSCR Expectations and Documentation

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Debt Service Coverage Ratio (DSCR) is a central concept tying together many of the documents described above—personal and business financials, tax returns, projections, and debt schedules.

Under SOP 50 10 8 the SBA requires lenders to demonstrate minimum projected DSCR of 1.15x within the first two years of the loan.

Most SBA lenders in today’s environment target 1.25x or higher as their internal underwriting threshold.

The most conservative lenders often require 1.50x or above especially in industries with customer concentration margin volatility or operational risk.

Accurate documentation allows lenders to calculate DSCR reliably and confirm the transaction meets both SBA and internal credit-policy standards.

Conclusion

SBA acquisition financing involves a detailed documentation process designed to give lenders confidence in the buyer, the business being acquired, and the proposed transaction structure. While the documentation may feel extensive, preparing it early helps avoid delays and ensures a smoother path from underwriting to closing.

At Pioneer Capital Advisory, we guide buyers through every step, from packaging the lender presentation to preparing for underwriting and pre-closing. Our process helps clients know exactly what to expect, stay organized, and move efficiently from LOI to close with confidence.

If you’re evaluating an acquisition or preparing to enter SBA underwriting, PCA can help you stay ahead of every requirement.