The request usually arrives as one line in an email: “please send your most recent financial statements”. What that means depends on the lender and the product, and the fastest route to an approval is to find out exactly what yours means before producing anything. This guide is about what is commonly asked for, what the variations are, and how to produce the owner-prepared version well. It makes no promise about what any lender will accept; only your lender can say that.
What is commonly asked for
- A Profit and Loss for the last full year, and often year-to-date for the current one.
- A Balance Sheet as of the end of that period.
- Business tax returns for one to three years, and bank statements for the last three to twelve months.
- Sometimes an aging of receivables, a debt schedule, or a personal financial statement for the owner.
The questions to ask your lender first
- Owner-prepared, or prepared by a CPA? Many small-business loans and lines accept statements the owner prepared and signed. Some programs, including certain mortgage programs that qualify on a Profit and Loss alone, require statements prepared by a CPA or other credentialed tax professional. The difference decides who does the work and what it costs.
- Cash basis or accrual? Statements built from bank and card statements are cash basis. Most small-business lending is comfortable with that; some underwriting wants accrual, which needs receivables, payables and inventory that bank statements do not show. What the difference is.
- Signed and dated? Lenders that accept owner-prepared statements usually want them signed and dated by the owner. Ask whether they want a specific attestation wording.
- Which period, and how recent? “Most recent” may mean the last calendar year, the last fiscal year, or the last twelve months to the end of last month.
Producing the owner-prepared version well
The lender’s analyst will check the Profit and Loss against the bank statements you also sent. Statements built from those same bank statements, with each one proved against its printed balances, agree with them by construction. Transfers between your own accounts must be out of the revenue and expense lines; owner draws must be in equity, not expenses. If any of that is wrong, the analyst finds it, and the application slows down.
A Rekonix Lite packet is built that way from the statements: Profit and Loss, Balance Sheet, and a proof page showing each statement’s beginning balance, activity and ending balance, so the analyst can verify it rather than take it on faith. A Basis of preparation page after them says how they were built (cash basis, from the statements provided) and that they were not audited, reviewed or compiled, and the statements can carry a signature line and date for the owner to sign. You see the whole packet before paying; the download is $49.99.
What it is not
It is not a CPA-prepared statement, and it carries no assurance. If your lender needs that, a CPA will still find a packet like this a faster starting point than a year of raw statements, and you should ask them what they need from you before buying anything.