How Does the SBA Review Them?

January 18, 2018

8a Certification – Your firm’s financial statements?

What is required to be submitted?

All firms applying for 8a Certification must submit the following:

a. A copy of the firm’s current year to date balance sheet and income statement. The date of these statements cannot be any older than 90 days old when submitted to the SBA. We suggest that you provide the latest date as possible.

b. If the firm’s financials are prepared on an accrual basis and the current year to date balance sheet exhibits accounts payable or accounts receivable you must provide corresponding aging statements. If the firm’s financials are prepared on a cash basis, an accounts payable or accounts receivable aging statement is not required to be provided.

c. A copy of the firm’s last three completed year end balance sheets and income statements or as many as they have been in business, if less than 3 years.

What basis (Cash or Accrual) should the firm’s financial statements be submitted on?

I suggest that you submit the balance sheet and income statements on the same basis as you filed your firm’s federal income tax returns on. If you prefer to provide your financials on a different basis than what your federal income tax returns are filed, be prepared to be support any significant increase or decrease by backup documentation should the SBA request it.

Is it OK to use the tax returns as the financial statements?

No, you must provide a balance sheet and income statement prepared in accordance with generally accepted accounting principles or on an accepted cash basis. If you use QuickBooks, we suggest using the standard report as the copy to be submitted.

What minimum requirements must the current year to date balance sheet and income statement exhibit to meet the basic 8a eligibility requirements?

The current year to date financials must exhibit positive net income, positive total equity and positive working capital at a minimum.

What exactly does the SBA look for when they review and screen the current year to date financial statements?

a. Is the current year to date balance sheet and income statement no older than 90 days from date of receipt?

b. Have the balance sheets and income statements been prepared in accordance with generally accepted accounting principles or an accepted cash basis?

c. If the firm’s financials are prepared on an accrual basis, are the aging schedules for accounts payable and receivable consistent with the current year to date balance sheet provided?

d. Are there any accounts payable or receivable that are over 90 days old? If so, the SBA may discount these amounts and it could possibly reflect negatively on your firms potential for success criteria.

e. Does the firm have fixed assets? If so, are these fixed assets recorded properly? Are the fixed assets reported with depreciation or at actual value?

f. Do the firm’s fixed assets correspond with its type of business? For example, if the firm performs construction work does it have construction equipment? If you are a general contractor and your balance sheet exhibits no fixed assets (hammers, drills, construction equipment, etc.) your income statement should show leasing costs associated with the rental of equipment needed to perform its projects.

g. If the firm is a dealer, wholesaler, or supplier, does the firm maintain any inventory and is it shown on its balance sheets?

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