What should the borrower clarify before collecting documents?
Name the lender, program, purchase form and purpose. Ask for periods, reports, reliance and conditions. A seller package cannot be assumed sufficient before those instructions arrive.
The buying hub frames the deal; the SBA guide explains policy. Track lender-purpose proof and open conditions before proposed funds become closing assumptions.
Record borrower, firm, lender role, program, date and category. Name the repository. Keep personal finance and bank detail restricted to the actual authorized lender process.
SBA rules have stated program and category limits. Other lenders may differ. This sheet cannot approve funds. Record actual credit decisions separately from preparation status.
Which fields make the package reviewable?
Tie records to purpose and calculation basis. Combined price cannot settle every threshold or source test. Keep each relevant definition beside the amount used.
| Field | What to record | Why it matters |
|---|---|---|
| Requirement | Lender instruction and category | Identifies the applicable review |
| Basis | Project cost, business price, property, or repayment | Prevents mixing calculations |
| Scope | Entity, period, and report purpose | Makes evidence comparable |
| Source | Record origin and reconciliation | Supports the financial input |
| Recipient | Intended user and reliance | Separates seller and lender reports |
| Status | Received, needs clarification, or accepted | Distinguishes upload from review |
| Condition | Open issue, owner, and next date | Shows what remains before funding |
Separate proposed, received, clarification needed, accepted for this purpose, approval required and blocked. Upload cannot settle every condition. Name the next reviewer and proof required.
Which eight lender-document areas should be checked?
- Document the actual transaction category first.
Get ownership, control, participation, employment, operating history, industry and structure facts for category review. Name borrowers and guarantors. Expansion, Owner Buyout and trust routes have conditions beyond labels. Ask the lender to confirm the actual category before using its equity, debt coverage, report or retained-seller rules.
- Reconcile uses and distinct price bases.
Separate business consideration, appraised owner-occupied property, fees, working capital, equipment and other uses. Record each rule's basis for thresholds, injection, maturity and limits. Reconcile sources with uses. Revenue or combined price cannot determine all diligence requirements. Show the defined amount used for each test, rather than assume every policy rule starts from the same number.
- Prepare historical and interim support.
Follow lender instructions for statements, returns, transcripts, ledgers, bank or merchant proof and reconciliations. Match entities, periods and interim dates. Explain differences and preserve corrections. Higher forecast earnings cannot replace required history.
- Substantiate adjusted repayment capacity.
Support adjustments, recurrence, owner replacement and covered debt. Use the lender's permitted cash-flow numerator and service denominator. Annual coverage differs from monthly timing. Avoid duplicate replacement costs or missing labor. A seller SDE schedule is not automatically approved credit analysis.
- Trace equity and source terms.
Trace available buyer funds, allowed other sources and qualifying seller-debt terms. Check standby, subordination, payment limits and combined limited-source treatment where relevant. Bank cash may already be committed. An ordinary note may not qualify as injection. Obtain lender review before calling sources compliant, and retain the evidence needed to show actual available funds at closing.
- Confirm valuation and QoE purpose.
Record category, defined business-price trigger, exceptions, independence, intended lender user, reliance and cash-proof scope. Get engagement instructions first. Seller preparation differs from lender-benefit reporting. A polished report cannot satisfy a mandatory review barred from preparation by or for the seller.
- Prepare collateral and property evidence.
Identify collateral, title, occupancy, appraisal, use history and environmental questions for the actual property. Assign specialists where needed. A shop or yard label cannot establish identical inquiry or maturity for every deal. Keep property review separate from business valuation. Record report purpose, limits and unresolved lender conditions before assuming that collateral evidence completes the funding package.
- Track operating authority and final funding conditions.
Track firm and qualifying approvals, consents, insurance, allowed seller duties and final lender deliveries. Separate submission, acceptance, approval and effective dates. Name who resolves each open condition. Complete folders cannot authorize work or guarantee funds release. Align the supported operating plan with actual lender terms, and record accepted evidence before treating the closing contribution as available.
Which current SBA boundaries govern the evidence?
SOP 50 10 8.1 defaults to Initial Acquisition unless another category is documented. Check history, ownership, industry, tenure, structure, borrowers and guarantors. A buyer label cannot establish an exception. Get the lender's finding.
The 7(a) summary allows eligible ownership-change uses under its rules, with a $5 million single-loan maximum. Eligibility is not approval. Cumulative exposure needs its own calculation.
Initial Acquisition equity uses defined total project cost. Limited sources together may supply at most half the required injection. Qualifying seller debt needs subordination and loan-term standby. Ask the lender to confirm actual terms.
Covered seller earnouts are prohibited. Retained duties vary by category. Check necessary seller work before committing to a role the selected route cannot support. The staffing plan must fit actual financing terms.
What does a worked price-basis check show?
Assume a hypothetical $4.1 million purchase: $1.4 million appraised owner-occupied commercial property and $2.7 million defined business consideration. Label revenue, fees and working capital separately. Each rule needs its own actual basis.
The $2.7 million business basis is below the specified $3 million mandatory QoE trigger. Use the defined price, not property or revenue. Category and exceptions still matter. Record the applicable lender finding.
That result cannot waive other diligence, valuation, lender duties or property review. Recheck if category or price changes. The file should show actual requirements, rather than call the entire package exempt.
A seller report cannot meet a mandatory independent lender-benefit QoE by itself. Check user, independence, scope and reliance first. Keep seller source records separate from the required engagement and accepted report.
How should repayment and liquidity checks remain separate?
Assume hypothetical acceptable annual cash flow of $150,000. Acquisition debt service is $110,000, plus $15,000 continuing covered service. Total is $125,000. Coverage is $150,000 divided by $125,000, or 1.20. The starting basis remains an explicit assumption.
Assumed Initial Acquisition coverage of 1.25 makes that example short. Forecast growth cannot repair unsupported history. The buyer cannot simply choose another category. The lender reviews classification and allowed adjustments.
Use the diligence guide and financial guide for source proof. The lender reviews adjustments, debt and category. Monthly cash timing differs from the annual credit finding.
IRS Publication 583 explains source records. It cannot approve credit or choose the debt-coverage numerator. Match dates and allowed adjustments before using evidence in the lender's calculation.
Which property and authority requirements remain conditional?
EPA's guidance covers specified property-related protections. Sites, collateral and lender facts govern review. No universal Phase I mandate is asserted. Ask qualified advisers about the actual purpose.
Use the property guide for that review. Label business price, appraised property and other uses separately. Combined totals can obscure the rule governing a threshold or maturity.
California's entity guidance illustrates one state's route. The buyer licensing guide assigns actual local questions. A lender file cannot provide missing license approval or accepted qualifier ties.
Funds and lawful work need compatible conditions. Neither proves the other. Record accepted dates before relying on dispatch or loan proceeds.
How should the package move toward lender review?
- Confirm category, basis, scope, and actual document instructions.
- Reconcile historical records and proposed adjustments.
- Trace sources and obtain lender-purpose independent-report instructions.
- Resolve collateral, authority, consents, and required seller arrangements.
- Record lender conclusions and carry final conditions into the closing checklist.
Use actual lender, adviser, agency and contract dates. A generic application period cannot guarantee acceptance. List next proof and reviewer for each open condition.
How should the checklist be printed and used?
Print checks with a controlled sheet for requirements, proof IDs, status, owners and dates. Keep personal and bank records in the authorized lender process. Reference them without copying unnecessary detail.
Which mistakes obscure lender readiness?
Avoid mixed price bases, ordinary notes called equity, forecasts replacing history, assumed reliance and uploads mistaken for approval. Preserve definitions and the lender's accepted finding beside each input.
Show supported inputs and open conditions. The lender decides credit treatment. A completed sheet should expose the next proof needed, rather than imply financing is approved.