If you are a small business looking for financing, you’ve likely heard of SBA loans. These are loans backed by the Small Business Administration (SBA) and administered through local lenders. The most popular SBA loan type is the 7(a) loan. As of July 2023, 40,775 7(a) loans have been approved in 2023.

Each SBA 7(a) loan application requires SBA Form 1920. This form holds information about the applicant and the loan they would like.

Key takeaways

  • SBA Form 1920 is required for every SBA 7(a) loan application
  • The form includes information about the lender, the applicant and the type of loan they want
  • The lender always fills out SBA Form 1920

What is SBA Form 1920?

SBA Form 1920, officially known as the Lender’s Loan Application for Guaranty, is a form filled out by the lender and submitted to the SBA. While the lender fills out the form, the applicant (borrower) will provide much of the information for it.

The form collects information about the loan the applicant wants and how the lender will administer the loan. This includes information about where the funds will come from, how the funds will be used and what type of loan the applicant wants.

Bankrate tip
The SBA publishes a weekly lending report, providing insight into average loan amounts for the 7(a) and 504 loans, demographics and industries funded.

Sections of SBA Form 1920

The form includes several sections. Each section asks for specific details about the loan, the lender or the applicant. Here’s what each section requires.

Part A: Loan processing options

The first section covers how to process the loan. This starts with whether the loan will undergo delegated processing or non-delegated processing. Delegated processing means the lender will use their underwriting team for the loan underwriting process. Non-delegated processing means the SBA will carry out the underwriting process and make a decision on the loan application.

Part A also allows the lender to choose the loan delivery method. This largely depends on the type of 7(a) loan the applicant wants. These types include:

Part B: Lender information

In Part B, the lender provides their basic identifying information. This includes their Lender ID, address and contact information.

Bankrate insight
Not every state is best for getting an SBA 7(a) loan. California, Texas and Florida have the largest amount of 7(a) loans funded. North Dakota, Hawaii and Vermont have the lowest amount of approved funding for SBA 7(a) loans.

Part C: Small business applicant information

The next section asks for information about the small business applying for the loan. First, the lender must identify whether the business is an Eligible Passive Company (EPC). An EPC is a company that doesn’t have active ongoing business practices.

The second part of Part C asks about the operating company (OC). The lender must say how long the company has existed. They must also provide the company’s legal structure, address and basic contact info. Part C also asks how many employees will be retained or hired because of the loan.

Part D: Structure information

Part D includes information about the loan being requested. This includes the loan amount, the loan term and how often payments will occur. The section also covers the structure of the loan interest rate, including whether the rate is fixed or variable.

Part E: Complete project information

Part E is all about how loan funds will be used. Options include:

  • Land acquisition
  • New construction or renovations to a current property
  • Improvements to a leased property
  • Machinery and equipment
  • Furniture and fixtures
  • Purchasing inventory
  • Working capital
  • Paying off or refinancing certain loan types

The section also covers how much of the loan’s funds are for business needs. If funds are used for purchasing inventory, will the loan cover all expenses, or will the business put in some of its own capital? Will additional loans be used to fund the business needs?

Parts F-R: Eligibility requirements

The following sections (parts F-R) detail the eligibility requirements to qualify for an SBA loan. How these sections are completed will help the SBA determine the business’s eligibility. These sections ask about:

  • Does the company have an Employee Stock Ownership Program (ESOP)
  • Does the business currently operate in the U.S.?
  • Does the business fit the SBA definition of a small business?
  • Does the business have a demonstrated need for the loan funds?
  • Does the business have a product or service that is available to the public?
  • Has the business pursued all other avenues for credit and found it unavailable?
  • Will all business owners with over 20 percent ownership sign a personal guarantee for the loan?
  • Do individuals in the business have a criminal history?
  • Is the business at least 51 percent controlled by U.S. citizens or lawful permanent residents (LPRs)?
  • Do any of the business owners have a history of surrendering a business to the government due to financial issues?
  • What is the size of the business?
  • Does the business meet the SBA’s  occupancy and leasing requirements?
  • Will the loan funds cover a business acquisition?
  • What is the valuation of the business?
  • Will loan funds be used for refinancing other debts?
  • Is the business a franchise?

The lender must fill out the information required on each topic. They will need to get any of this information from the business applying for the loan.

Parts S-U: Loan type

These sections specify information for specific SBA loan types. These sections will only apply if the applicant is applying for a CAPLine, Export loan or 7(a) small loan. Section S addresses CAPLines. Section T covers Export loans. Section V covers information specifically about 7(a) small loans.

Part V: Fees paid to others

Part V asks about fees paid by the applicant. It specifically asks if they have paid any fees to the lender or a broker in exchange for help preparing the loan application. If the answer is yes, SBA Form 159 must also be completed.

When is SBA Form 1920 submitted?

SBA Form 1920 is submitted along with the entire loan application package. The lender gathers all of the necessary SBA forms, supporting documents and other loan application materials and submits them all together. Depending on the loan type, the SBA has different processing centers, but they typically have options for the lender to submit application materials online or by mail.

Once the application is submitted, you will need to wait for the SBA to process the loan before you know if it has been approved.

The bottom line

SBA Form 1920 covers the general characteristics of the loan and the business applying for it. Business details include how the business operates, business size and the company’s valuation. Loan information asked for on the form includes loan amount, interest rate and how the loan funds will be used.

The form is always filled out by the lender. However, the applicant will need to provide much of the information the form asks for, so it is a good idea for the applicant to be familiar with the form.

Frequently asked questions

  • SBA Form 1920 is required by the SBA when a business submits an application for a 7(a) loan. The lender fills out the form but requires information about the business applying for the loan and the type of business loan they want.
  • The lender fills out SBA Form 1920. However, the lender will likely gather much of the information needed for the form from the business applying for the loan.
  • SBA Form 1920 is required when applying for every 7(a) loan. This includes Standard 7(a) loans, Small 7(a) loans, Community Advantage loans, Express loans, Export Express loans, Export Working Capital, International Trade and CAPLines.