SBA lenders view of personal balance sheet

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August 02, 2024

by a searcher from Columbia University - Columbia Business School in Leesburg, VA, USA

Do lenders (SBA or otherwise) look at my personal balance sheet inclusive of my wife's 401k & IRAs or solely at my own assets + our joint assets like house & brokerage accounts? Since the spouse usually has to sign the PG anyway I would think all are included.

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Reply by a searcher
from Baruch College in New Jersey, USA
From my experience your wife's finances aren't required on your personal balance sheet. You can choose to include her assets to improve your odds of approval or to reduce other collateral needs, but it's not required. If your home is required for collateral and it is jointly owned, then she will need to sign. Thanks ^redacted‌ for the tag.
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Reply by a lender
from Eastern Illinois University in 900 E Diehl Rd, Naperville, IL 60563, USA
Great question. First, it is a common misconception that a spouse must guarantee the SBA 7A loan. Unless they have an ownership interest, your spouse is not required to guarantee the loan. There can be some strategic reasons why it might make sense to have them guarantee the loan including: a) If you plan to use cash they have for the down payment; b) you want to show enhanced assets for qualifying for the loan; or 3) they have outside income to help support personal living expenses and your global cash flow so there is less of a reliance on your need to take a large draw from the business. However, it is not required they guarantee the loan. In fact, I would say the spouse probably guarantees less than 25% of the loans we are involved in.

If there is a collateral shortfall on an SBA 7A loan, then the Bank is required to seek outside collateral on the loan. Most often that collateral can be found in equity in a guarantors home. If there is 25% or more equity in the home, then the SBA must take the home as additional collateral. In those cases the spouse is required to sign a limited guarantee only as it relates to their ownership in that home so that it can be pledged as additional collateral on the loan.

The SBA does require your spouse sign the personal financial statement, even if they are not going to be a guarantor. This is so the SBA can confirm jointly held assets.

Lastly, if your spouse has significant outside assets and is going to be a guarantor, that can impact your ability to get a loan done. Knowing there are additional assets available to help support the loan is of value. Usually the higher the loan amount you are going for, the more support SBA lenders want to see in net worth and post closing liquidity. If your spouse's assets can work to enhance that, it could make it easier for you to qualify for a loan.

However, having your wife's assets there is she is not a guarantor if they are held in her name only does not provide much support for a lender. It might still give a lender slightly more comfort in the approval process knowing there are additional assets from your spouse, but they cannot rely on those assets in underwriting because they would not be available in a default situation.

I hope this information helps. If you have additional questions on spousal guarantees, you can email me direclty at redacted or contact me here.
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