How Important is Financial Reporting in Getting Small Business Loans

Getting Small Business Loans

Most of the entrepreneurs rely on small business loans during expanding their business because it will simplify their cash flow needs, purchase of new equipment, hiring new employees etc. At this point, inexperienced owners need to have go through a number of problems in understanding different information because they are new in the field and unaware of the requirements of strategic plans, break even analysis, income statements, complete business plans, marketing tactics to be applied and many more. Normally while applying for small business loans, entrepreneurs have to make a history of their business for 2 or 3 years. Here, at We Can Financial, you will be able to learn that every lender requires different financial reporting that should have different aspects of the business.

This article will through light over different financial reporting information along with continuing support after initial requirements are provided.

Since everybody knows that managing a business is not an easy task and it always requires a lot of time and consideration, business associates normally do not get enough time to properly work on their financial statements due to which, quality of documents does not meet the standard. Also, they are limited to present their working capital while applying for $350,000 financing. Usually, most of the banks provide government authorized small business loan facilities which are difficult to qualify. Therefore, at WE CAN FINANCIAL, we always recommend our clients to hire a charted accountant for preparing financial statements having a Notice to Reader, thus assuring that the numbers are up to 100% free from mistakes according to the margin of materiality.

For a start-up, sales and execution are the main targets while correctness of accounting principles and book keeping are at second spot and if an entrepreneur needs to have small business loans in the near future, then he/she should have to maintain the quality of business operations.

So, what are the areas to be taken care of?

  • Record of business investment from the start of business in order to write off an amount from taxes to be paid
  • Comprehensive inventory count
  • Accurate purchase ledge
  • Timely sales tax remittance
  • Proper expense ledge
  • Correctly recorded sales
  • Accurate employees’ salaries ledger

Apart from these, there are many other departments that a business associate should monitor. Here, we would like to mention one thing that you should always have to present positive income in the Income statement even if there is a possible write off exist because this way, you can only qualify for small business loans. Lenders prefer to give money to those who show great progress over the couple of years and have ability to pay it off.

For large and medium sized companies, who are considering to have more than $500,000 as loan, financial reporting requirements are different. It will all depend on their size of business, amount of loan requested and financial statements’ Review Engagement quality. Below are the reasons to provide such financial reporting:

  • Risk management requirements
  • Accurate reporting for standardized services
  • Detailed review of business processes and internal control

To have more comfort in getting small business loans, We Can Financial is available at your ease. Just give us a call and get relaxed.

Happy financing everyone!

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Author: AllOntario Team is an information resource for Ontario residents and a marketplace for Ontario businesses. It’s all about living and doing business in Ontario. All in one site.