My SBA Loan Pro
Form 2202 must be completed on behalf of the subject business requesting the loan and all affiliate businesses.
Affiliate businesses are defined by the SBA as any business owned 51% or more by a 20% or more owner of the subject business.
Schedule of Liabilities
Form 2202 documents the subject business and affiliate businesses monthly debt obligations which is essential to determining the debt service coverage ratio or DSCR for short and Debt To Tangible Net Worth ratio also known as leverage.
Both The DSCR and Debt To Tangible Net Worth ratios are key indicators used by lenders to determine the businesses ability to repay the requested loan.
It’s important to list all current and long term liabilities visible on the balance sheet whether secured or unsecured including but not limited to credit cards, lines of credit, term loans, equipment loans, loans from shareholders etc. Failing to do so will render the form incomplete, inaccurate and cause delays. Also, failing to properly document all liabilities may cause the underwriter to lose confidence in the ownership’s competence and knowledge of their true financial status.
Next I’m going to reveal five best practices to ensure Form 2202 is completed accurately and quickly.
- Find a time and place to complete where you will not be interrupted by customers or employees
- Review the form and then gather all required supporting documents prior to starting, including all promissory notes, business loan agreements and current monthly loan statements.
- Instead of stopping when you are confused, create a list of questions and keep moving forward
- Email your list of questions to your ThinkSBA loan specialist or discuss via phone
- Be honest and accurate, as all information will be confirmed through the collection of supporting documents
Honest and Accurate
Once you’ve completed the form you are now required to sign the form, certifying the honesty and accuracy of the information to the Federal Government. Therefore always, I stress always answer the questions honestly and accurately. Inaccurate or fraudulent answers will be discovered.
In conclusion, the schedule of liabilities is vitally important to successfully completing the SBA Loan application. When you’re stuck, don’t stop but keep moving forward, writing down your questions and then contact your ThinkSBA loan specialist right away.
Congratulations! You’re now ready to complete the SBA Schedule of Liabilities Form 2202.
My SBA Loan Pro
The My SBA Loan Pro Podcast is hosted by Your SBA Loan Pro, Ryan Smith. In each episode Ryan provides valuable information and best practices regarding the SBA loan program.
Each episode is approximately one minute in length and addresses topics related specifically to SBA 7(a) and 504 loan programs to purchase real estate, acquire a business or franchise and obtain working capital.
You’re encouraged to listen and subscribe to ensure you’re notified each time a new episode is available. Ryan publishes a new episode weekly on Tuesday mornings, unless he’s kidnapped to a deserted island of course.