How to read SBA Form 413, the personal financial statement
SBA Form 413 is the personal financial statement behind the economic-disadvantage tests for the 8(a) and women-owned small business programs. It looks like an ordinary net worth worksheet, but a few lines do not mean what they appear to, and those are where applicants get tripped up. This reader walks the form part by part and points out each one, cited to its official source.
This explains the form so you can fill it out yourself. It is not the form, not legal or accounting advice, and not a determination of eligibility. Only the certifying body decides. You write your own answers and file everything yourself.
- Each proprietor, general partner, or managing member of an LLC
- Each owner of 20 percent or more of the applicant business
- For SBA 8(a) and WOSB certification, each owner claiming social and economic disadvantage
- Any person guaranteeing an SBA loan the business is applying for
A married applicant who is not legally separated also files separate financial information for a spouse. See the caveats below.
Everything you own, at fair market value. The form asks for the gross figures; the programs apply their own exclusions afterward, so what you write here is not what counts against the limit.
- Cash on hand and in banks
- Savings accounts
- IRA or other retirement accountDetailed in Section 5. Excluded from the SBA net worth test and the DBE net worth test, but counted toward the total-asset cap.
- Accounts and notes receivable
- Life insurance, cash surrender value onlyDetailed in Section 8. Only the cash surrender value counts, not the face amount, so a term policy is zero here.
- Stocks and bondsDetailed in Section 3.
- Real estateDetailed in Section 4.
- Automobiles
- Other personal propertyDetailed in Section 5.
- Other assetsDetailed in Section 5.
Everything you owe. Net worth is total assets minus total liabilities, before any program exclusion.
- Accounts payable
- Notes payable to banks and othersDetailed in Section 2.
- Installment account, auto
- Installment account, other
- Loan(s) against life insurance
- Mortgages on real estateDetailed in Section 4.
- Unpaid taxesDetailed in Section 6.
- Other liabilitiesDetailed in Section 7.
The rest of the form is detail behind the totals above. You fill in only the sections that apply to you.
- Section 1, source of income and contingent liabilitiesSalary, net investment income, real estate income, and other income; plus debts you may owe if something happens (a co-signed loan, a legal claim).
- Section 2, notes payable to banks and others
- Section 3, stocks and bonds
- Section 4, real estate owned
- Section 5, other personal property and other assets
- Section 6, unpaid taxes
- Section 7, other liabilities
- Section 8, life insurance heldFace amount and cash surrender value. Only the cash surrender value flows into your assets above.
The form asks for the cash surrender value of your life insurance, not the face amount. A term policy has no cash surrender value, so it adds nothing to your assets. Only whole or universal policies with a cash value belong here.
Qualified retirement funds (IRA, 401(k), and similar) are excluded from the personal net worth test. They are still counted toward the SBA total-asset cap of $6.5 million, which includes your home and your business. This is the trap that denies applicants whose net worth clears but whose total assets do not.
For SBA 8(a) and EDWOSB, the equity in your primary residence is fully excluded from net worth. For the DOT DBE program, only your share is excluded, so a jointly owned home is treated differently. Enter your figures in the personal net worth calculator to see both.
SBA will attribute back to you any assets you transferred to an immediate family member for less than fair market value within two years before applying, unless the transfer was for education, medical expenses, or other essential support. Customary gifts for birthdays, graduations, anniversaries, and retirements are not counted.
When you are married and not legally separated, you submit separate financial information for your spouse. SBA considers your spouse's situation where the spouse has a role in the business, such as an officer, employee, or director, or has lent money to, provided credit support to, or guaranteed a loan of the business.
Answer for your own situation. Nothing here is stored, and this is not advice. It only points you at the caveats above to confirm with the cited rule and your own tax and legal advisors.
The form itself does not tell you whether you clear the net worth and total-asset limits. The personal net worth calculator applies the exclusions above and shows you instantly, for both the SBA and DOT DBE thresholds. Free, no email.
The official form: SBA Form 413 (sba.gov), OMB 3245-0188. We prepare, you file.