May 04, 2022
How to Complete SBA Form 601
While SBA loans offer many benefits, it takes time and patience to complete all of the paperwork involved to take them out. If you plan to use your loan proceeds to construct or renovate a commercial building, one of the forms you may need to fill out is the SBA form 601. Let’s take a closer look at what SBA 601 is and how it works so you can determine if it applies to you.
What Is SBA Form 601?
Also known as an Agreement of Compliance form, the SBA Form 601 was released in October 1985. It must be completed by a borrower and construction contractor for any SBA loan that involves construction costs that exceed $10,000. The SBA 601 guarantees that any contractors and subcontractors performing work will comply with anti-discrimination laws. It states that they won’t discriminate based on race, color, religion, sex, or national origin.SBA Form 601 and DIY Construction Projects
If you plan to build or renovate a commercial building, you may wonder whether Form 601 applies to you. First and foremost, understand that the SBA doesn’t usually approve DIY construction projects. They’re often unsatisfactory and lead to problems down the road, which can be costly for the SBA and its approved lenders. Therefore, you’ll only be able to DIY a construction project if you meet rigorous requirements and receive approval from the SBA. In this case, you won’t have to fill out an SBA Form since it’s designed for contractor-based projects. But you may be required to complete another form in place of it.
How to Fill Out SBA Form 601?
SBA Form 601 must be completed by the borrower and each contractor before the construction or renovation of the commercial begins. Here’s what you can expect if you need to fill it out:- Terms and Conditions Section: The majority of the form clearly outlines the terms and conditions of the agreement. It’s crucial to review the documents a few times to ensure that you understand and agree with everything. If something doesn’t make sense, don’t hesitate to reach out to your SBA-approved lender for clarity.
- Borrower and Contractor Section: There is also a section that will ask for the name, address, and phone number of your business and the signature of your authorized representative. The contractor will also need to provide their name, address, phone number, the signature of their authorized representative, and corporate seal, if applicable.
Other Forms You May Need to Fill Out
In addition to SBA Form 601, the SBA will likely require you to complete several other forms when you apply for a loan. While the documents you need will depend on your particular lender and finances, the most common ones include:- SBA Form 1919: The SBA Form 1919 is for anyone who owns 20 percent or more of your business and any employee that manages day-to-day operations. It gathers information about the small business owners, the loan request, indebtedness, and current or previous government financing.
- SBA Forms 148 or 148L: Since anyone who owns 20 percent or more of your business must provide a personal guarantee, SBA Forms 148 or 148L document this guarantee. While Form 148 is an unconditional, unlimited guarantee, 148L is for a conditional, limited guarantee.
- SBA Form 160: SBA Form 160 is the board of directors resolution form. If you have a board of directors, this form states that they’ve agreed to the loan and have the authority to take it out.
- SBA Form 355: SBA Form 355 verifies that you own a small business that conforms to the SBA’s size limits. If you’re applying for the Small Business Investment Companies (SBIC) Program, you’ll need to complete Form 480 instead.
- SBA Form 413: SBA Form 413 will ask you to list your assets and liabilities so that the lender can evaluate your creditworthiness and ability to repay what you borrow. While this form isn’t required, many lenders still use it.
- SBA Form 159: SBA Form 159 is the fee disclosure and compensation agreement. If you hired an agent to help you obtain your loan, the form will explain who the agent is and what type of compensation they’ll receive.