about the request in terms of amount, purpose, a story about the financial capacity and perfor-
duration, repayment and available collateral. It mance of a business. A well prepared package
also should include a brief description about the will include four types of statements: cash flow
business and include a crisp narrative outlining statement, income statement, balance sheet and
the positive effects the loan will have on the busi- personal financial statement.
ness. Additionally, statement of purpose should
include one or several paragraphs describing the Cash Flow Statement
amount of capital invested by the owners.
A cash flow statement is used to monitor and
project incoming and outgoing cash, typically on
Business Plan or Plan Excerpts
a monthly basis. It helps you and your lender de-
Having a comprehensive, well-thought-out busi- termine how much cash your business will have
ness plan is essential to the financing process. on hand at any point in time. If your business has
You need a business plan before a lender will or will have a negative cash position, it means
provide a loan. In fact, without one, even ap- that at a given point in time you have more mon-
proaching a lender may be pointless.
ey going out than coming in and you will proba-
bly not be able to pay your bills. Obviously, this
A good loan package will include a current busi- type of information will get a lender’s attention.
ness plan or key excerpts from your plan.
Your package should include a current twelve
In addition to the statement of purpose, and fi- month cash flow statement, projected for at least
nancial statements, your loan package should in- six months out. All cash projections should be re-
clude a current business plan or plan excerpts, alistic and supported.
with at least the following sections:
•Business description & vision Income Statement
•Market definition and analysis The income statement is a measure of how a
•Description of products and services business has performed over a specific period
•And, a brief overview of your organization and of time, usually six months or one year. It mea-
management
sures all income less all expenses to arrive at the
amount of profit or loss generated by the busi-
If you do not have a business plan, or if you are ness for the period. If your business is a new
not familiar with the components of a business venture, your loan package should include a pro-
plan, it is highly recommended that you take the jected income statement, projected for twelve
time to educate yourself and to thoughtfully de- months out. If you are an existing business with
velop such a plan.
a history, include income statements for the last
three years, if available. Your lender may also re-
Financial Statements
quest a current interim-income statement.
Financial statements are a critical and necessary
component of a loan request package. They tell
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