2016-12-30 00:00:00Borrowing and LoansEnglishReview financial statements you may need when applying for a business loan, and look at programs and services to help you create those...https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Two-men-sitting-at-office-desk-talking-by-computer.jpghttps://quickbooks.intuit.com/ca/resources/borrowing/resources-to-help-with-financial-statements-for-business-loan-applications/Resources to Help With Financial Statements for Business Loan Applications

Resources to Help With Financial Statements for Business Loan Applications

2 min read

When you apply for a business loan, the lender may require a range of financial documents and projections, as well as a detailed business plan. In most cases, you have to present your personal financial records such as bank statements and credit history. Additionally, in some cases, you may need proof of assets that you plan to use as collateral. Gathering this information is pretty straightforward, but it’s useful to learn more about the aspects components of a business loan application.

Business Plans

A solid business plan is the cornerstone of a successful loan application. Your plan should explain what your business does, your target market, projected costs and income numbers, and multiple other details. To create a business plan, you may want to check out programs such as enLoop. This app provides templates, text suggestions, editing tools, and some forecasting tools available in a range of currencies. Alternatively, you could look at services such as Consulting Canada, which help entrepreneurs find business consultants — including writers who specialize in drafting successful business plans.

Financial Projections

A financial projection is an overall look at how you expect your business to perform in the first few years. This statement requires estimates about your startup expenses, potential cost of goods sold, sales forecasts, and income statements. Based on these numbers, it presents conclusions about your potential balance sheets, financial ratios, and projected likelihood of breaking even or profiting. There are also free Excel templates that can help you create these statements.

Startup Expenses

If your lender wants an estimate of startup costs, you should start with a list of everything you anticipate needing, including supplies, staff, and equipment. You can create this list on a spreadsheet and add cost estimates for each of the numbers in a column next to the list. However, as you start to invest in items for your business, you may also want to use an expense tracking app or a budgeting app. This will allow you to track the expenses you incur while also comparing them to your projected budget.

Opening Day Balance Sheet

An open day balance sheet simply shows how much capital you anticipate having on hand when you officially start your business. This should include the business owner’s equity contributions, loans, and projected assets, but should also take into account expenses you expect to incur before opening. With accounting software such as QuickBooks Online, you can enter these numbers and create balance sheets.

Cash Flow Projections

To create cash flow projections, you need to estimate your starting costs, make sales forecasts, and draw conclusions about how much cash you’re likely to have on hand throughout various periods during your startup phase. Some lenders want a three-month cash flow projection, while others might ask for a two-year projection or other alternative. Futurpreneur Canada offers cash flow templates that are designed for aspiring business owners who applying for startup capital.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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