Which documents and instruments make up the closing package for a business loan — checklists of what is required at closing, the organisation of that package, and the individual closing instruments (personal guarantee, landlord waiver, settlement sheet) a borrower must obtain or execute.

How is a closing document different from the paperwork you already sent?

Your application documents described the business so the lender could decide. Closing documents are new instruments drafted for this loan: they create the debt, the lender's security and the owners' undertakings. A sample closing checklist from one lender, published undated by the U.S. Treasury's CDFI Fund, marks who provides each item: the lender supplies the business loan agreement, promissory note, security agreement, guaranty, new borrowing resolution and closing statement, and the borrower supplies its organising documents. SBA's instructions for its Settlement Sheet (Form 1050) have the lender complete it and both parties sign it at the initial loan disbursement.

Each item comes from one of three places, which decides who can move it:

• You or your owners sign it. Once the drafts arrive, the timing is yours.
• A third party produces it. A landlord, existing creditor, insurer or state office must act, and you can ask but not compel.
• The lender or its counsel prepares it. Drafts, lien searches and filings come from the lender's side, and your part is prompt review.

Handle the list like a records request and the third-party items start last.

What do the note and the loan agreement establish?

The note is the promise to pay. In SBA's Note (Form 147), the borrower promises to pay the lender the principal, interest on the unpaid principal balance and all other amounts the note requires, and its defaults include missing a payment and failing to do anything required by the note and the other loan documents. The loan agreement carries the covenants: Truist's undated article on loan covenants says covenants in a commercial financing agreement define what a borrower can and cannot do during the life of the loan.

Read both drafts against your approval terms before closing day; names, amount, rate, maturity, payments, collateral and conditions must match.

What do the security documents and filings do, and what must you supply?

Security documents give the lender rights in the collateral: depending on what is pledged, the CDFI Fund sample lists a security agreement, pledge agreement, mortgage, assignment of rents and leases, and deposit control agreement. For its SBA loans, Live Oak Bank's undated collateral article says all assets financed with loan proceeds must be included as collateral. California's Secretary of State says on its UCC page that filing there serves to perfect a security interest in named collateral and establish priority if the debtor defaults or goes bankrupt; that office is the central filing office for certain financing statements. California's filing-information page describes where the creditor should file, so ask the lender where and when it will file, and keep the filing acknowledgment. The CDFI Fund sample lists the recorded mortgage as a post-closing document.

The lender drafts from what you give it, so supply these before drafting starts:

• Exact legal name. California's UCC filing-information page says a registered organization's legal name is the exact name under which it is organized, best checked in its registration documents.
• Collateral list. Give each asset's description, any serial or vehicle number, and where it is kept.
• Existing liens. Name every creditor that already holds a lien or filing.

Check the draft's collateral description against your list. SBA's Note (Form 147) requires the borrower to sign any document needed at any time for the lender to acquire, perfect or maintain its liens, so an error found later still comes back to you.

Which items must you get from someone else, and what do you start first?

Third-party items depend on someone outside your control, so start them together once the lender's forms arrive; they depend only on those forms, the search results and your collateral list:

• Search results. Get the lender's UCC search, a lender item on the CDFI Fund sample, and its final collateral list; still name every creditor you know holds a lien or filing.
• Existing creditor. If there is one, request at once the instrument the lender specifies, such as a subordination or intercreditor agreement; if the lender requires it, the closing waits for that creditor's signature unless the lender agrees otherwise.
• Landlord. If collateral sits in leased premises or on property you do not own, send the lender's landlord waiver to the owner as soon as you receive it.
• Insurer. Give the lender your agent's details at once, start any required life insurance immediately, and request property endorsements once the collateral list is final.
• State. Check the entity's status with the state when the checklist arrives and resolve anything other than active then; order the certificate itself close to closing so it is current.

Ask each party for its turnaround when you send the request, and put that date on the checklist.

For an SBA loan, SBA's page for its Standby Creditor's Agreement (Form 155) says the form formalizes that the standby creditor subordinates its lien rights in the collateral to the SBA lender and takes no action against the borrower or any collateral securing the standby debt without the lender's consent. The same page says the lender may use Form 155 or its own form and that a copy of the note must be attached, so have the standby debt's note ready.

Mid Penn Bank's undated landlord's waiver form shows what a property owner signs: its liens and claims on the collateral, including any right to levy or distrain for unpaid rent, become subordinate to the lender's lien and security interest, and the lender may, but need not, remove the collateral; collateral the lender leaves when the lease ends is deemed abandoned by you and the lender and becomes the landlord's, and the form's collateral excludes property integral to the building or its operating systems. Check its collateral description against your list, and include the waiver in your lawyer's review. First Bank of the Lake's undated closing-tips page says the landlord waiver can affect how quickly a loan closes and recommends addressing it early. If the landlord refuses or wants changes, tell the lender that day and ask in writing whether it will accept the changes, take the waiver after closing as a dated condition, or change the collateral.

What is a personal guarantee, and what should you do before signing one?

Live Oak Bank's undated collateral article defines a personal guarantee as a promise to repay the loan with personal assets if the business defaults. SBA's regulation on loan conditions (13 CFR 120.160) says holders of at least a 20 percent ownership interest generally must guarantee the loan, and that SBA, or the lender on a loan it processes under delegated authority, may require other individuals or entities to give full or limited guarantees regardless of ownership; your approval names each guarantor for your loan.

SBA's Unconditional Guarantee (Form 148) shows what to look for in any guarantee draft:

• Scope. The guarantor unconditionally guarantees payment of all amounts owing under the note, including any assumption, renewal, substitution or replacement of it.
• Lender's powers. The lender may take listed actions without notice or the guarantor's consent, including modifying the note or other loan documents except to increase the amounts due.
• Duration. The guarantee remains in effect until the note is paid in full.
• Collection order. The lender need not seek payment from any other source before demanding it from the guarantor.
• Several guarantors. Everyone signing as guarantor is jointly and severally liable.
• Waivers and duties. A section lists rights, notices and defenses the guarantor waives, and the guarantor must give the lender financial statements as it requires.
• Acknowledgment. The guarantor acknowledges having read and understood the significance of all terms, including the waivers.

Ask for the guarantee draft early. Before closing day, each guarantor should take it, with the note and loan agreement, to a lawyer who acts for that guarantor, not for the lender or the business.

Live Oak Bank's collateral article also says that when an SBA loan is not fully secured by business assets, SBA requires individuals to pledge personally held real estate if the equity exceeds 25% of its value. Take any mortgage or pledge over an owner's own property to that owner's lawyer before signing, and have the business's own lawyer review the note, loan agreement and security documents before closing day.

What entity evidence and signing authority will the lender need?

The lender needs proof that the business exists, is in good standing, has authorised the loan and signs through the right person. The CDFI Fund sample asks the borrower for organising documents by entity type, such as articles of organization and an operating agreement for an LLC, or articles, bylaws and any existing borrowing resolution for a corporation; it also lists a certificate of good standing, which that lender obtains, and a new borrowing resolution it drafts. In California, the Secretary of State's business entities records page says a Certificate of Status certifies an entity's current status; corporations, LLCs and limited partnerships can get one online within minutes, while registered general partnerships and LLPs request it from the Sacramento office in person or by mail, so they should order it earlier. Elsewhere, use the registering state's filing office, and ask the lender how recent the certificate must be.

Before the resolution is drafted, confirm that the governing documents you send are the current signed versions, that changes of officers, managers or members are documented, and that the intended signer is someone those documents allow to act. A stale or unclear record found at the table can stop an otherwise complete package.

With several owners or a parent company, the signer list grows. Each owner the approval names signs a guarantee, and the CDFI Fund sample asks a company guarantor for its own organising documents, standing certificate and resolution to guaranty. SBA's Note (Form 147) says all individuals and entities signing it are jointly and severally liable, so ask the lender, and your lawyer, in what capacity each person signs each document.

What insurance evidence is due at closing?

Insurance evidence depends on an insurer and on the final collateral list. The CDFI Fund sample lists, as borrower items, hazard insurance naming the lender as mortgagee, contents insurance naming it as lender loss payee, liability insurance naming it as additional insured, and an assignment of life insurance. SmartBiz Bank's guide to loss payee endorsements tells borrowers to contact their insurance provider and submit an endorsement request, then give the lender a new certificate of insurance. First Bank of the Lake's undated page on business acquisition loans says that, when you are buying a business, the insurance must be bound and in force at or just before closing, and that life insurance, typical with such loans, can take longer than expected and delay closing if not started in advance. Ask your lender when it needs each certificate and endorsement, and put that date on the checklist. Give your agent the lender's exact name and address, and check each certificate against the collateral list.

How do you read the settlement statement before you sign it?

The settlement statement reconciles the agreed loan with what reaches each payee. For SBA 7(a) loans it is the Settlement Sheet (Form 1050), which SBA says lenders must use for the first disbursement on all standard 7(a) loans. Its instructions require three things:

• For each use of proceeds, the payee, the amount disbursed and the amount remaining under the Authorization, the payee being the ultimate recipient, not an intermediary such as a title company
• A settlement-charges line backed by an itemised list of every charge, beside a separate SBA guarantee fee line
• The borrower's injection, which must be in the business bank account before any proceeds are disbursed

Other lenders use their own forms; the CDFI Fund sample lists a closing statement, disbursement forms and the fees charged at closing.

What does a worked settlement sheet look like?

Harbor Bakery LLC, a California company, has an approved 250,000.00 SBA 7(a) loan for an oven line, a build-out drawn in stages, and working capital. All figures are invented and imply no fee or rate.

Read it from the funded amount down to the net:

1. The 250,000.00 note, less 45,000.00 left for later build-out draws, leaves 205,000.00 disbursed at closing.
2. Direct payments of 142,000.00 to the equipment vendor and 20,000.00 to the builder leave 43,000.00.
3. The guarantee fee and settlement charges, 6,000.00 together, leave 37,000.00.
4. That 37,000.00 is the net to the business account and must equal the working-capital line.

Before signing, confirm each of these:

• The note amount matches the note and your approval terms.
• Each use and amount matches your approval, and each payee is the party that should finally receive the money.
• The settlement charges agree with the itemised list, charge by charge.
• The remaining amount matches the draws you expect.
• The Borrower's Injection section shows each injection and its source, and the injection is already in the business bank account.
• You can truthfully give Form 1050's certifications: the proceeds were disbursed, received and will be used as the Authorization's Use of Proceeds section provides; every required equity or borrower injection has been made as the Authorization requires; and the borrower and operating company have had no unremedied adverse change in financial condition, organization, management, operations or assets since the application that would warrant withholding this or any further disbursement. The form's warning says signing certifies these statements and your supporting information as true and accurate to the best of your knowledge.

If account details for any payee, including your own account for the net, reach you by email or message or change before closing, confirm them before you sign by calling a number you held before they arrived and did not get from any email or message.

How do you run the closing checklist?

Ask the lender for its closing checklist when the approval arrives, and turn it into a tracker showing each item's source, who acts, its dependency, its lead time and its status. The CDFI Fund sample shows one lender's organisation: entity documents for the borrower and each guarantor, then closing documents, insurance, real estate, searches and intercreditor agreements, fees, disbursement and post-closing documents. Group the third-party items at the top so the dependency chain stays visible.

What does a working checklist look like?

This is Harbor Bakery LLC's tracker three weeks before closing; its lead times are the answers each party gave, not norms.

An item still open at the scheduled closing goes one of three ways, and the lender decides which:

The CDFI Fund sample's post-closing section shows that some items are expected after closing.

What changes for a programme-backed loan or staged draws?

SBA's 7(a) terms page for lenders says lenders are expected to close 7(a) loans the same way they close non-SBA loans and points them to SBA's SOP 50 10 for additional information. The programme still adds forms: Form 1050 itself says lenders must use it for the first disbursement on all standard 7(a) loans. For 504 loans, SBA's Form 2286 checklist lists the 504 note (SBA Form 1505) and the unconditional guarantee (SBA Form 148 or 148L). For any programme-backed loan, ask the lender for the closing checklist for your programme and route.

With staged draws, closing is not one event. Form 1050's instructions say the lender documents each later disbursement and attaches it to the original form, that lender and borrower are deemed to repeat the certifications with each disbursement, and that the lender keeps documentation acceptable to SBA, such as joint payee checks, cancelled checks, paid receipts or invoices. Treat each draw as a small closing: have its invoice or receipt ready, confirm the certifications still hold, and file its papers with the executed set.

What obligations start at closing, and how do you track them?

The duties in the documents begin when you sign. Truist's covenants article says qualitative covenants specify information you must provide, such as quarterly financial statements or tax reports, and that after a breach the lender may terminate the agreement, impose penalties or accelerate repayment. SBA's Note (Form 147) also counts as defaults failing to pay any taxes when due and changing ownership or business structure without the lender's prior written consent. Account conditions arrive through instruments such as the deposit control agreement and ACH form on the CDFI Fund sample.

Set up an obligations register the week you close, one line per duty:

• Reporting. Record each statement or certificate, its due date, its preparer and the date sent.
• Covenants. Record each financial test, its test date and the figures it needs.
• Insurance. Record each required policy, its renewal date and when the renewal certificate reached the lender.
• Accounts. Record any account the lender controls or debits and what it requires there.
• Consents. Record the changes that need the lender's written consent first.
• Post-closing conditions. Record each condition, its due date and its owner.

Put every date on a shared calendar with a reminder ahead of it; nothing surfaces these duties unless someone extracts them from the documents.

What does the executed package feed to the books, and what should you keep?

The first entries depend on the settlement sheet's note amount, payee amounts, fees and amount left for later draws, and on the note's principal, rate and payment terms. Recording the funded amount so it is not treated as income, splitting each payment between principal and interest, and recording equipment bought with the loan are covered in the related questions below.

Keep the complete executed set, not just the payment schedule:

• The note, loan agreement, security agreements, guarantees and resolutions, as signed
• Every third-party instrument, such as the landlord waiver and subordination agreement
• The settlement statement with its itemised charges, and each draw's documentation
• Insurance certificates, standing certificates and filing acknowledgments
• Post-closing letters, waivers and the completed checklist

Keep one full signed copy in a single folder indexed by the closing checklist, with any originals the lender returns. Keep the set because the signed instruments, not a summary, set what the business can and cannot do for the life of the loan. Form 1050's instructions have the lender keep the signed settlement sheet and disbursement documentation in its own loan file, but that file is the lender's, not yours. Each guarantor should keep a personal copy of the guarantee and note.