For SBA lenders
Short answer
Lenders must obtain personal financial statements and tax returns for all principals, analyzing their non-business income, expenses, and debt to include in a comprehensive global cash flow analysis for repayment capacity.
Prudent lending standards for SBA loans require a 'global cash flow' analysis for most loans, especially those with significant personal guaranties. This means combining the business's cash flow with the personal income and expenses of the principals (and their spouses, if applicable) to determine if there's sufficient surplus to service both business and personal debts.
For a business generating $100,000 in net cash flow, the lender also collects the owner's personal tax returns and financial statements. They identify $50,000 in personal income (e.g., spouse's salary) and $40,000 in personal debt service. This combined cash flow ($150,000) is then compared to total business and personal debt obligations to determine global repayment capacity.
Insider move
Incomplete or inaccurate personal financial information can lead to an overstatement of repayment capacity. Lenders must meticulously verify personal income and debt, accounting for all significant personal expenses, to ensure a realistic global cash flow assessment.
13 CFR Part 120 — Business Loans
Office of the Federal Register · Federal regulation
SOP 50 10 - Lender and Development Company Loan Programs
Last checked 2026-06-13. Official sources control — verify before relying on any rule for a live deal.
Last reviewed 2026-06-13 · SBA sources checked through 2026-06-13. DealRoom analysis of public SBA 7(a) lending records (FY2020–present). Grounded in the current SBA rulebook; verify against the official sources above before relying on it for a live deal. Not legal, tax, or financial advice, and not an approval decision.
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