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Glossary

What is Personal Financial Statement?

Also called: PFS, SBA Form 413, personal balance sheet

In one sentence: A signed summary of an individual's assets, liabilities, income and contingent obligations, which SBA lenders collect from owners and guarantors.

Last updated · Precise SBA editorial

In plain English

A personal financial statement is a snapshot of your personal balance sheet: what you own, what you owe, and your income. SBA lenders use it because owners usually guarantee the loan, so the lender needs to know what stands behind that guaranty and how much the household can carry.

The SBA’s own version is SBA Form 413, which the SBA uses to assess the financial situation of applicants across several programs, including 7(a) and 504 loans. Lenders may use it or an equivalent form of their own.

What it covers

  • Assets: cash, retirement accounts, investments, real estate, vehicles, business interests.
  • Liabilities: mortgages, auto loans, student loans, cards, other notes.
  • Income: salary, business income, investment and rental income.
  • Contingent liabilities: guaranties of other loans, pending lawsuits, tax obligations.

How lenders use it

  • Liquidity and equity: is the equity injection there, and what’s left after closing?
  • Global cash flow: your personal debts and income feed the household side of coverage; see global cash flow.
  • Collateral: real estate equity may be needed if the business assets don’t fully secure the loan.

It must be current: for guarantors, dated within 90 days of loan approval, so a long process can mean updating it.

Hypothetical example

A buyer lists $310,000 in cash and brokerage accounts, a home worth $600,000 with a $350,000 mortgage, and $40,000 of car and card debt. The lender sees $250,000 of home equity as potential collateral, checks that the $180,000 equity injection leaves a cash cushion, and uses the mortgage and car payments in the global cash-flow analysis.

Common mix-ups

  • It isn’t a credit report. The lender pulls that separately.
  • Leaving out a guaranty is a problem. Contingent liabilities belong on it.

What to do with it

Fill it in carefully, with statements to back each number. See documents for an SBA loan and the personal guaranty entry.

Common questions

Who has to complete a personal financial statement for an SBA loan?

Guarantors, which generally includes every owner of 20% or more, along with others the lender requires. The lender must obtain a personal financial statement from each individual guaranteeing the loan, except supplemental guarantors.

Do I have to use SBA Form 413?

Lenders may use SBA Form 413 or their own equivalent form. Use whichever your lender asks for.

Does my spouse have to sign it?

A non-owner spouse isn't required to sign the personal financial statement, though the spouse may need to sign collateral documents for jointly held assets. Spouses who are owners are treated as owners.

Related terms

Personal GuarantyA personal promise by an owner to repay a business loan out of their own assets if the business cannot.Global Cash FlowA combined view of the business and the owner’s household that tests whether all income can cover all debt payments, business and personal.SBA Form 159The SBA's Fee Disclosure Form and Compensation Agreement, used in 7(a) and 504 loans to identify any agent involved in a loan and the fees that agent is paid.

Go deeper

Documents You'll Need for an SBA Loan (and How to Get Them Ready)The paperwork is the part most owners dread. It's easier if you know what's coming and gather it once.What a Lender-Ready SBA Loan Request Looks LikeA lender-ready request answers the underwriter's questions before they're asked. It's organized around what the lender has to write in its credit memo, and it shows the math instead of describing it.

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General information, not legal, tax or financial advice. Precise SBA is not affiliated with the U.S. Small Business Administration. Rules and lender policies change. Examples use hypothetical numbers. We never charge you. If a loan closes, the lender may pay us a referral fee, disclosed on SBA Form 159 (how we get paid). Back to the glossary.