A lender asks for financial statements and tax returns. You export a few reports, but the totals do not agree with the documents already sent. Before submitting another file, establish which records describe which period and why they differ.
Preparing a lending package is partly an organization task and partly an accounting task. Your accountant can help clarify records, but the lender decides what it requires and whether to approve financing.
Start with the lender’s actual request
Obtain the current document list and clarify unfamiliar terms. Requirements vary by lender, product and business; do not assume a checklist from another applicant is sufficient. The SBA loan overview is a starting point for learning about its programs, not a promise that your business qualifies.
Identify the entity applying, the requested periods and whether the lender needs historical results, current interim reports or projections. Ask whether it specifies an accounting basis or level of professional service.
Use reports from complete records
A profit and loss statement should come from records that have been reviewed for the relevant period. A balance sheet needs explainable account balances. Missing loans, duplicated expenses or owner transactions misclassified as revenue can distort the picture.
If the books are behind, tell the lender and accountant. An attractive export does not make incomplete records complete. Agree on the catch-up work before treating a report as final.
Explain differences without altering the facts
A tax return may not match a financial report line for line. Keep a clear explanation of significant differences, including the version and accounting basis used. Our guide to business returns and profit and loss statements explains the questions to ask.
Do not change transactions just to make an application appear stronger. If a correction is needed, document the reason and provide a clearly labeled revised report where appropriate.
Keep historical results and projections separate
Actual reports describe recorded activity. A forecast describes assumptions about future activity. Label projections clearly and identify their assumptions rather than presenting them as results already achieved.
For example, a proposed new contract may be relevant to a forecast, but it should not be added to historical revenue simply because the owner expects it to happen.
Confirm the requested professional service
Bookkeeping-generated reports are not automatically audited, reviewed, certified or compiled financial statements. If the lender requires a particular engagement, ask whether your accountant offers it and what would be involved.
Send the lender’s requirements before work begins so we can confirm which record-preparation tasks we can help with. Audit, review or compilation engagements are not included in ordinary bookkeeping support.
Make the package traceable
- Label each file with the business, period and version.
- Keep supporting statements and debt schedules available.
- Include explanations for material differences when requested.
- Check that sensitive records go to the intended recipient securely.
- Retain a copy of what you submitted.
Go Tax Dude offers small business accounting support and business tax preparation from Port Washington. Schedule a consultation to discuss your records and the assistance requested. Financing approval and terms remain the lender’s decision.
General educational information. Accounting and tax treatment depend on your business and circumstances.