The IRS record of a filed return that an SBA lender orders itself, with Form 4506-C through IVES or Form 8821, to check the numbers it was given.
SBA’s tax verification checks two things: that the business filed its returns, and that the financial statements it gave the lender agree with them. A business that has not filed required federal returns is not eligible.
The lender gets transcripts through the IRS’s Income Verification Express Service, directly or through a participant, or by filing IRS Form 8821 with itself named as designee on line 2. SBA will not accept a Form 8821 filed by the borrower or its tax preparer. The lender reconciles any difference before first disbursement, except on SBA Express, where it may close first but risks a repair or denial of the guaranty if it cannot reconcile later.
The years depend on the size standard: three under the industry standard, two under the alternative, less the latest year if it ended within six months of the date SBA received the request. If the IRS does not answer in 10 business days, the lender sends the request again marked Second Request. If the IRS has no record, the lender needs proof of filing, such as an e-file acknowledgement, and proof of the tax paid or refunded. Example: a business with a December 31 year-end, on a request dated June 15, can leave out the prior year if it ended less than six months before.
How it shows up in the data here
Not public. The SBA loan file holds no tax data, and whether a lender reconciled transcripts is checked by SBA at guaranty purchase or in an oversight review. Ask the lender what it needs signed and when.
Go further
- Package checklist: SBA 7(a) loan: Where the transcripts sit in the order lenders ask.
- SBA 7(a) loan package checklist: A 7(a) package is the bank's usual file plus SBA's own list. Know which items SBA requires and you can have them ready before the first call.
- SBA 504 loan package checklist: A 504 project has three parties, two loans and a closing date set by a monthly bond sale. Build the package for all three.
Related terms
- SBA Form 413 (Personal Financial Statement): SBA's personal financial statement. Each 20 percent owner and each guarantor except a supplemental guarantor gives one, or the lender's own equivalent, signed and dated within 90 days.
- SBA Form 1919 (Borrower Information Form): The form each 7(a) co-borrower signs and gives the lender. It reports employees and jobs and the purpose of the loan, and the lender keeps the signed form and enters its data into SBA's system.
- SBA size standard: SBA's test that a business and its affiliates are small enough for a loan: the limit for its industry in 13 CFR 121.201, or an alternative of $20 million net worth and $6.5 million net income.
- SBA 7(a) loan: SBA's main business loan program. A lender makes the loan and SBA guarantees part of it: up to 85 percent of $150,000 or less and 75 percent of more, on loans up to $5,000,000.
Sources
Plain definitions for orientation, not legal, tax or credit advice. A lender's own policy decides what it will do.