Last Updated on September 3, 2018
A personal financial statement (sometimes called a personal balance sheet) is a form used by a lender to evaluate the financial health of a person. This type of form is not only used for a business loan but for any type of loan such as a home, vehicle, etc.
Personal financial statements look at the individual’s income and expenses in addition to their net worth. A lender may request documentation to support the information contained in the statement, such as pay stubs, bank statements, appraisals, etc. While this information is not typically required when submitting a personal financial statement, you should be prepared to provide the documentation to back up your numbers.
The personal financial statement is an important component in getting a loan for a startup business. Since there is no business history to base the loan decision on, a large weight is placed on the owner’s personal finances. This is why it’s important to ensure the owner’s personal financial statement and credit history is in good shape before going to the bank for funding.
While the bank needs the financial statement to make a decision on approving a loan, this statement is also useful personally since it shows your net worth. The net worth is the amount of assets owned minus how much is owed. This is a good number to track to see how you are doing financially.
Who needs to complete a financial statement?
Any person who owns 20% or more the business or is personally guaranteeing the loan will need to fill out a financial statement when applying for a loan. If you are married and file taxes jointly, only one statement is needed with their combined financial information, even if the spouse isn’t involved in the business. Depending on the type of business loan you are looking for, you will either need to fill out a traditional statement or one for SBA loans.
Traditional financial statement – This statement can be used for any type of loan. This is an Excel Personal Financial Statement to easily enter and calculate the totals.
SBA Form 413 – If you need an SBA-guaranteed loan, most commonly the 7(a) or 504 loan program, the SBA Form 413 will need to be completed. If you aren’t sure which type of loan you may be applying for, the SBA Form 413 will be still be accepted by most banks for non-SBA loans.
Feel free to download either of our free personal financial statements. Instructions on how to fill out the SBA 413 is included below.
What information do you need to fill out a personal financial statement?
Before filling out the form, gather the following documents or have access to your online accounts:
- Checking and savings account balances
- Retirement account balances (IRA, 401(k) )
- Current cash value of life insurance
- The current value of any other non-retirement investments such as stocks, bonds, etc
- Pay stub showing your current annual salary
- Amounts of other sources of income such as disability income, pension, etc
- Loan balances for a mortgage on personal property, vehicle loan, credit card, etc.
To verify the numbers entered in the report, lenders will often request the most recent statements. This is most common for salary, checking, savings and mortgage accounts.
How to fill out the SBA 413 Personal Financial Statement
While we have two versions, we will go through each of the sections of the SBA 413 personal financial statement and explain how to fill it out. Both have roughly the same information but are formatted differently. If you have questions on how to fill them out, let us know..
The first section asks for the name, address and phone number of the borrower. Include the most current information.
For the Business Name of the Applicant/Borrower use the official name of the business like the DBA, corporation / LLC filing or federal tax return. If the business hasn’t been named yet, leave blank for now.
If there is a co-borrower or someone guaranteeing the loan, have them fill out a separate form.
Assets & Liabilities
The next two sections ask about personal assets and liabilities. On the left side include all of the things you own (assets) and on the left side all of the money you owe (liabilities).
In the assets section, enter the total amounts in the relevant categories. Some amounts will refer to later sections where you will provide more details. Make sure to use a realistic market value as to what someone would reasonably pay to purchase these assets today and not their price when new.
Starting on the left side with the assets you own, you may have:
- Cash on hand and in Banks – Includes all cash and money in personal checking accounts.
- Savings Accounts – This is the money held in savings accounts, CDs and money market accounts.
- IRA or Other Retirement Account – Includes all personal retirement accounts like IRA, 401k, 403b, etc.
- Accounts & Notes Receivable: Most people won’t have a total here, but includes any money you personally lent to individuals that you are expecting to be repaid. The bank will likely request proof of the loan through a loan agreement or promissory note.
- Life Insurance – If you have any whole life insurance that has a cash-out value when canceled or provides a benefit to beneficiaries, include the amount here. Before entering the value, visit Section 8 on page 3 to individually list each policy. The bank may require that they are listed as a beneficiary on some insurance to help secure the loan.
- Stocks and Bonds – Any stocks and bonds not held in retirement accounts will be calculated here. Later in Section 3, you will list the investments individually. There are only four rows, so if you need more room you can add an attachment page. Even easier, print out a statement from your brokerage with the individual holdings and values.
- Real Estate – The value of any real estate will be shown here. This includes both your personal property, rental property and land. Provide the details later in Section 4.
- Automobile – Find the market value of any personally owned automobiles by using https://kbb.com and total that amount here and not the amount you paid. Only use the value of vehicles that are owned and not leased vehicles.
- Other Personal Property – Includes things like RV’s boats, jewelry, collectibles, or anything that has value while other assets are. If there is a way to prove the market value through an appraisal, eBay completed listing or market comparison, consider attaching the documentation to support your valuation. Otherwise, use reasonable values.
- Other Assets – Includes the value of other assets you own such as; businesses owned, airplanes, boats, etc. The same method applies to document the values as above.
All of these totals will be calculated, giving you the total amount of assets you own.
Next to the assets on the right side of the page is the section for liabilities. This will include all of the debts you have. Within the liabilities, calculate totals for:
- Accounts Payable: This is only for businesses with debt from suppliers and is not for credit cards or other personal lines of credit.
- Notes Payable to Banks and Others: This includes the amounts for all credit cards, personal loans, and personal lines of credit. List each account individually in Section 2 on page 2 of the form.
- Installment Account (Auto): This is for all of the vehicle debt and any leases on vehicles you own. On the far right side include the total amount of loans on all vehicles and include the total monthly and/or lease payments where it says “Mo. Payments”.
- Installment Account (Other): Include any installment loans, like student loans and personal loans. Add the monthly payment and total balance of all loans.
- Loans on Life Insurance: If you have a whole life insurance policy that a loan was taken out against, include the balance of the loan here.
- Mortgages on Real Estate: Calculate the remaining balance from any loans on real estate. You will add the balances for each loan in Section 4 on page 3.
- Unpaid Taxes: Add unpaid taxes like property taxes, income, school, or other taxes that are currently due but haven’t been paid yet. Include detailed information in Section 6 on page 3.
- Other Liabilities: This section includes any debts that weren’t covered in the earlier areas. List these individually in Section 7 on page 3.
Total up all of the liabilities and enter the number in the Total Liabilities section.
To figure Net Worth, take Total Assets and subtract Total Liabilities. The bigger the (positive) number the better.
The final total number in the liabilities section will be Total Liabilities plus Net Worth. It must be equal to Total Assets.
Section 1. Source of Income
- Salary – Include all income from wages that was reported on your latest tax return for you and your spouse if married and filing jointly. This should include all reported W2 and 1099 income. The bank at some point will want a copy of your last three years of tax returns.
- Net Investment Income – This is typically income from dividends and interest that came from stocks and bonds.
- Real Estate Income – If you have rental property, include your net income here. This number should match the tax return from the entity holding the real estate.
- Other Income – Include income from any other sources that aren’t covered from the other sources. Common sources include pensions, disability or child support. It is not required to add alimony or child support payments unless you want those payments to be counted towards total income. Be sure to explain the other income sources in the “Description of Other Income” section below.
Section 1. Contingent Liabilities
- As Endorser or Co-Maker – If you have cosigned any loans, list the amount of outstanding debt.
- Legal Claims & Judgments – Add any amounts from legal judgments and claims.
- Provision for Federal Income Tax – This area is used if you are estimating to have federal income tax liabilities by the end of the year.
- Other Special Debt: Any other liabilities that weren’t covered in the earlier areas would be entered here.
Section 2. Notes Payable to Banks and Others
This section details information about all personal debts.
- Name and Address of Noteholder – Add the name and address of the companies you have debts with. If you have multiple loans or credit cards from the same bank, list each account separately and list the last four numbers of the account.
- Original Balance: Include the starting loan amount. If the account is a credit card, use $0.
- Current Balance: Show the amount left to pay on the debt. Use $0 for credit card accounts that are paid in full each month.
- Payment Amount: Even if you pay more, list the minimum payment that you can make. Doing so could help reduce your debt to income ratio which is important in the loan approval evaluation. For credit card accounts you can write “varies.”
- Frequency: List the repayment schedule of the debt. This is usually monthly.
- How Secured or Endorsed – Type of Collateral: Describe how the loans are secured. Common sources of collateral for debt would be real estate, automobile, etc. If it is a debt like student loans or credit cards it would be unsecured.
There are five rows provided in this section. If more rows are needed, add an additional page with your name, date and SBA Form 413 – Section 2 on the top of the page.
The current balance total will be used in the Liabilities Section on page 1 under Notes Payable to Banks and Others.
Step 3: Stocks and Bonds
In this section include any stocks, bonds, mutual funds and efts that you (and your spouse if married and filing jointly) own that are not held in a retirement account.
- Number of Shares – Include the number owned
- Name of Security: Note the name
- Cost – Enter the purchase price of the investment
- Market Value Quotation/Exchange – Use the market price on the date you are filling out the form
- Date of Quotation/Exchange – List the day you obtained the quote
- Total Value: Calculate the total market value of the investment.
There are only four rows provided in this section. If more rows are needed, you can add an additional page or your brokerage statement with your name, date and SBA Form 413 – Section 3 on the top of the page. Instead of writing the name of the security, include the name of the brokerage account and See Statement to save some time. Under Total Value, use the total value of all securities from that brokerage.
Calculate the Total Value from all accounts and put that number in the Assets section on page 1 under Stocks and Bonds.
Section 4. Real Estate Owned
In this section, enter information for all real estate owned. Each property or piece of property needs to be entered separately.
There are three columns provided in this section. If more rows are needed, add an additional page with your name, date and SBA Form 413 – Section 4 on the top right corner of the page.
Put your personal residence in “Property A”. In this section you will list:
- Type of property – Personal residence, land and investment property are common choices
- Date Purchased
- Original Cost
- Present Value – If you have an appraisal from the last three years you can use it, otherwise use a reasonable estimate. Websites like Zillow can help come up with an estimate. Don’t pay for an appraisal just yet. If the bank requires one, they typically won’t use one supplied by the owner.
Calculate the Present Market Value from all of the properties and include that amount in the Assets section “Real Estate” on page 1.
- Name & Address of Mortgage Holder
- Mortgage Account Number
- Mortgage Balance – If the property is paid off, just use $0.
Calculate the Mortgage Balance from all of the properties and include that amount in the Liabilities section “Mortgages on Real Estate” on page 1.
- Amount of Payment per Month/Year
- Status of Mortgage – Common responses include current, delinquent, foreclosure or paid in full.
Section 5: Other Personal Property and Other Assets
If you have any additional personal property or assets that are valuable and did not fit any of the earlier sections, include those items in this section. Common items that would go in this section include RVs boats, airplanes, jewelry, etc. Include a brief description (like year, make and model) of the item and market value. If the item has a loan against it, include the name and address of the lienholder, amount of the loan, terms of payment and if the payment is delinquent.
If you own a small business, you can include that asset in this section as well. Be prepared to provide a valuation of the business to the lender. A professional appraisal isn’t needed at this time.
Enter the market value of these assets in the “Other Personal Property or Other Assets” in the Assets section on page 1. If there is any debt on these items, the debts also need to be detailed in Section 7 – Other Liabilities.
Section 6. Unpaid Taxes
If there are any property, payroll, state or federal taxes owed, list those individually in this section. If there are unpaid payroll, state or federal taxes, this is going to make getting a loan a lot more difficult. It’s recommended to get those resolved before going to the bank and requesting a loan if at all possible.
Calculate the total amount in the Liabilities section “Unpaid Taxes” on page 1.
Section 7. Other Liabilities
Use this section to list any debts assets held from Section 5 or any other debts that weren’t covered from the other sections.
Calculate the total amount in the Liabilities section “Other Liabilities” on page 1.
Section 8. Life Insurance Held
List all of the life insurance policies currently held. If you have policies that have a cash-out or death benefit, calculate the total amount of those payouts in the Assets section “Life Insurance – Cash Surrender Value” Only) on page 1.
Last, the form needs to be signed and dated in addition to the social security number for you and your spouse if married and filing jointly.