Documents Required

When applying for an SBA 7(a) loan to purchase a business, you will need to collect several documents from the seller. These documents help lenders assess the business’s financial health and ensure the transaction meets SBA guidelines. Here’s a list of key documents you should collect:

1. Business Financial Statements:

• Profit and Loss Statements (P&L): Most recent 3 years.
• Balance Sheets: Most recent 3 years. 

2. Federal Tax Returns:

• Business: Most recent 3 years.
• Personal: If business income flows to sellers personal return.

3. Current Year Interim Financials:

• Profit and Loss Statements (P&L): Within last 60 days
• Balance Sheets: Within last 60 days
• Business Debt Schedule: To ensure all debts are paid off with sale proceeds. 
• Accounts Receivable Aging
• Accounts Payable Listing

4. Reports Ordered by the Buyer’s Lender:

• Real Estate Appraisal
• Business Valuation
• Phase One Environmental Report 
• Survey – may be required by the title company to issue title insurance.

5. List of Business Assets being Sold:

• Inventory
• Automobiles
• Equipment
• Furniture and Fixtures
• Legal Description of Real Estate

6. Pre-Need Contracts and Agreements:

• All pre-arranged funeral contracts, key business agreements, supplier agreements, and employment contracts.

7. Business License and Permits

• Copies of any licenses and permits required to operate the business.

8. Organizational Documents

• Copies of the Articles of Incorporation, bylaws, or operating agreements.

Additional Seller Items Collected Prior to Closing:

• Customer and Supplier Lists: Details on key customers and suppliers, which could impact the business’s ongoing operations.
• Seller’s Disclosure Statement: A statement from the seller disclosing any known liabilities, pending lawsuits, or other business risks.
• Seller Non-Compete Agreement: Seller signed agreement not-to-compete with the business after the sale.

These documents are crucial for both the SBA lender and the buyer to evaluate the business and determine the loan’s viability. It’s also recommended to work with an experienced business broker or financial advisor to ensure all relevant documents are properly collected and reviewed.