Connecticut tax & business guide
Preparing Financial Statements for a Business Loan
How to organize bookkeeping and prepare reliable Profit and Loss Statements and Balance Sheets before applying for a business loan or financing.
Overview
Start with the facts and deadlines.
A lender may request current and prior-year financial statements to evaluate revenue, profitability, debt, cash flow, and the financial position of the business. Reports generated from unreconciled books can delay the application or raise questions.
Step 1
Ask the lender exactly what is required
- Profit and Loss Statement
- Balance Sheet
- Year-to-date and prior-year comparisons
- Business tax returns
- Bank statements
- Debt schedule
- Accounts receivable or accounts payable aging
Step 2
Reconcile the accounting records
Every bank and credit-card account should be reconciled through the reporting date. Duplicate transactions, uncategorized activity, personal expenses, missing loan balances, and incorrect opening balances should be reviewed before reports are delivered.
Step 3
Review the Profit and Loss Statement
- Confirm that revenue agrees with supporting records.
- Separate major expense categories clearly.
- Review payroll, contractor, vehicle, rent, insurance, and interest expenses.
- Compare current results with prior periods and investigate unusual changes.
Step 4
Review the Balance Sheet
Cash, receivables, fixed assets, credit cards, loans, taxes payable, and owner equity should be supported by records. A Balance Sheet that does not balance or contains old unexplained amounts should be corrected before submission.
Ready to get organized?