Lenders evaluate your business’s financial health before approving a loan. Having organized financial statements increases your chances of success.
Gather core documents. Prepare your profit and loss statement, balance sheet and cash‑flow statement for the past two to three years. If you’re a new business, include projected financials.
Explain variances. Large swings in revenue or expenses should be explained. Perhaps you invested in new equipment or had seasonal sales fluctuations. Clear explanations build lender confidence.
Personal financial statement. Many lenders require the business owner’s personal financial statement. Be ready to disclose personal assets and liabilities.
Prepare a debt schedule. List existing loans and credit lines with balances, interest rates and payment terms. This shows lenders you understand your obligations.
Use professional bookkeeping. Accurate and up‑to‑date financials show that your business is well‑managed. Working with a bookkeeper or fractional CFO can ensure your numbers are clean and presentable.
By following these steps, you’ll know “how to prepare financial statements for a business loan application” and improve your chances of approval.
