Financials
The financials should be developed after you've analyzed the market and set clear objectives, when you can allocate resources efficiently.
Historical Financial Data
If you own an established business, you will be requested to supply historical data related to your company's performance. Most creditors request data for the last three to five years, depending on the length of time you have been in business.
The historical financial data you should include is your company's income statements, balance sheets, and cash flow statements for each year you have been in business (usually for up to three to five years). Often creditors are interested in any collateral you may have that could be used to ensure your loan, regardless of the stage of your business. You may also need to include copies of loan applications or capital equipment and supply lists.
Prospective Financial Data
All businesses, whether start-up or growing, are required to supply prospective financial data in their business plans. Creditors typically want to see your financial projections for the next five years. Each year's documents should include forecasted income statements with break-even analysis, balance sheets, cash flow statements, and capital expenditure budgets. For the first year, you should supply monthly or quarterly projections. For years two through five, you can stretch it to quarterly or yearly projections.
Make sure that your projections match your funding requests; creditors will be on the lookout for inconsistencies. It's much better to catch mistakes before they do. If you have made assumptions in your projections, be sure to state them clearly so the reader will not be left guessing.
Finally, include a short analysis of your financial information. Include a ratio and trend analysis for all of your financial statements (both historical and prospective). Since pictures speak louder than words, you may want to add graphs of your trend analysis (especially if they are positive).
References:
• Small Business Administration
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