What if your financial statements do not match your tax returns?
Short answer
A 7(a) lender must reconcile any discrepancies against IRS transcripts before first disbursement. Significant differences must be resolved to the lender's satisfaction, and to SBA's on non-delegated loans. Source: SOP 50 10 8.1, Sec. A, Ch. 5, Para. B.4.
The lender must reconcile the difference, generally before it disburses. SBA's verification exists to confirm that your financial statements agree with the returns you filed (SOP 50 10 8.1, Sec. A, Ch. 5, Para. B.1, p. 95).
What the rule requires
Except on SBA Express and Export Express, a 7(a) lender must reconcile discrepancies between your financial data and the transcripts before first disbursement. A Certified Development Company (CDC) must do so before it requests debenture funding (Para. B.4). Significant differences must be resolved to the lender's satisfaction. On non-delegated loans, they must also satisfy SBA's processing center (Para. B.4.f).
If it cannot be resolved
A delegated lender that disburses without reconciling puts its guaranty at risk of repair or denial (Para. B.4.f). A CDC on a delegated 504 loan cannot submit the debenture closing package until it reconciles.
Possible fixes
- If you amended a return, the lender uses the amended transcript or other proof of filing (Para. B.4.e).
- If your accountant prepared different statements, ask for a written reconciliation.
- Give the lender your explanation before it finds the gap.
What not to do
Do not change your statements to match without explaining why. On Form 1919, you certify that your information and supporting documents are true in all material respects.
On an SBA Express loan
Reconciliation applies if the lender uses business financial information to decide credit. If it relies on a scoring model instead, it verifies filing and size but need not reconcile (Para. B.4.g).
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