How to make sure the lender will like your financial statements

As a small business owner,  you or your Accountant are completing your financial statements which includes your tax returns, make sure some basic high level numbers are in order to look attractive to potential lenders and investors.

The 1st one is mostly not in your control, which is gross income, or gross receipts.     An increasing gross receipts figure is a major number lenders look at – Are sales increasing?    If sales are increasing, even if net income is down, that is extremely appealing to potential lenders and investors.     The business is heading in the right direction.

Another high level figure is net income, or taxable income – is the business profitable?    If gross receipts are increasing but net income figures are down, the lender will look deeper, knowing that the expense figures may have been handled differently from one year to the next.    Sometimes amortization and depreciation are handled differently from one year to the next.    Officer salaries may have increased on the corporate return for accounting reasons which lowers the net income figure.    However, if expense figures are handled the same from one year to the next, the lender will expect net income figures to at least remain the same or increase.

Other numbers are important, but if the request is under $100K,  especially if under $25K – $50K,  many lenders will not intensely scrutinize other figures, such as retained earnings, cash on hand, or request a personal financial statement to review listed stock, stated value of business, real estate holdings, and other assets, nor itemization of debt that appear on a personal financial statement.

Small Business Loan Resources:

SBA Community Blog and Forum –  Blog and Forums by the SBA, Small business administration.   Questions can be asked and answers provided.

U.S. Department of Commerce – Helps american businesses become more innovative at home and competitive abroad.

U.S. Bureau of Economic Analysis – Provides statistics on consumer spending, corporate profits, travel and tourism and much more.

Entrepreneurworld – Resource for Entrepreneurs, including starting your own business, growing your business.

Bureau of Labor Statistics – Provides companies with up to date information on employment, demand, hiring, productivity and other information that may be useful to companies.

International Trade Administration – Creates jobs and economic growth by promotingU.S. companies abroad to governments in other countries.

More Small Business Loan resources:

Department of Labor – Provides information on many labor issues that can be useful to companies, such as insurance, regulation, wages, wage hours, compensation, safety and health

U.S. Patent and Trademark Office –U.S. office to file patents to protect a companies new or existing proprietary products.

U.S. Trade and Development Agency – Promotes U.S. Exports to Foreign Countries, please review if your company is interested in exporting goods to foreign countries.

CEO Refresher - A monthly newsletter on creative leadership ideas. Short articles, brief book reviews, models, management tools, quotations and commentary.

E-Network for CEOs – Online articles and much more for CEO’s

Public Radio Planet Money – All issues money related to the public.

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