Financial Section

Careful preparation of the financial reports will provide the lender(s) with a clear perspective of the financial feasibility of the venture.

I.  Financial History

    A.  Existing Statements- For an existing business, you should present the last three years CPA prepared financial statements and the most recent interim statement.  If you do not use a CPA, copies of the federal tax returns should be included.  Personal financial statements current within 90 days on all owners should be presented along with the company statements.

    B.  Financial Projections- The financial projections you provide with your business plan and loan proposal should be complete, but more importantly, realistic. Do not maie the mistake of attempting to make the projections rosy.  Doing this will not positively influence the lender and will not help you.  Base your projections on actual expenses and what you really think you can do in sales.  No pie in the sky numbers!  You should include the following projections with your plan.

        1.  Source and use of loan and equity funds statement.
        2.  Projected balance sheet for opening day (if start-up).
        3.  3-year income statement projections
        4.  3 year cash flow projections.
        5.  Information on the assumptions supporting your projections.

Your income statement and cash flow projections should be done on a monthly basis for the first year.  A summary sheet for each should also be included.  The summary sheet will show the total sales, expenses and net profit for each of the years projected.  The projected balance sheet for a new business should be complete and in the proper format.  The source and use of loan and equity funds statement should be based o nactual costs and be supported by documentation if needed.  Again, do not guess- find out what it is going to cost you to go into business.  Plan how you are going to use your money!  You will find a sample cash flow, profit and loss and balance sheet in the Resources section on this web-site. Using them will assist you in presenting your idea in the proper format.

    C. Source and Application of Funds; Collateral

Summary chart of the sources of all funds required for the start-up or expansion planned. Identify source, amount of funds from each source, terms or conditions, and status of commitment.

Collateral (hard assets that the bank can sell in the case of business failure to recover their investment) must be provided by the business, or the business and the owners. Even for a corporation, owners must provide personal financial statements (assets and liabilities) to the bank and may have to personally guarantee the loan.

    D. Capital Equipment List

A listing of the specific equipment to be purchased, including the model or other description, cost per unit, source or supplier, whether new or used, anticipated useful life if not common knowledge, and other information to justify expense and need for funds.